Open Yale CoursesECON 252: Financial MarketsLecture 11 - Stocks<< previous session| next session >>Overview:The stock market is the information center for the corporate sector. It represents individuals' ownership inpublicly-held corporations. Although corporations have a variety of stakeholders, the shareholders of afor-profit corporation are central since the company is ultimately responsible to them. Companies offerdividends, stock repurchases and stock dividends to give profits back to shareholders or to signal information.Companies can also take on debt to raise capital, creating leverage. The Modigliani-Miller theory of acompany's leverage in its simplest form implies the leverage ratio doesn't matter, but including bankruptcycosts and tax effects give us a positive theory of the ratio.Reading assignment:Jeremy Siegel, Stocks for the Long Run
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