Lecture%20Notes%20for%20Oct%2019

Futureincomestreamisimportant

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Unformatted text preview: tablished firms pay dividends – Net Income (Profit) distributions to owners that are not retained for reinvestment in the firm Shareholders are the owners of corporations The Price of a Stock is the sum of its discounted dividends and the discounted resale value (capital gain or loss) 1.) Future income stream is important Depends on economic conditions and managerial performance Complex A game of knowledge 2.) Can’t control the future – only what you pay today 3.) Risk/Reward trade off Increased risk brings higher rewa...
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