Chapter09 - Chapter 9 Stocks and Their Valuation Learning...

Info iconThis preview shows pages 1–4. Sign up to view the full content.

View Full Document Right Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: Chapter 9 Stocks and Their Valuation Learning Objectives After reading this chapter, students should be able to: Identify some of the more important rights that come with stock ownership and define the following terms: proxy, proxy fight, takeover, and preemptive right. Briefly explain why classified stock might be used by a corporation and what founders shares are. Determine the value of a share of common stock when: (1) dividends are expected to grow at some constant rate, (2) dividends are expected to remain constant (zero growth), and (3) dividends are expected to grow at some supernormal, or nonconstant, growth rate. Calculate the expected rate of return on a constant growth stock. Apply the total company (corporate valuation) model to value a firm in situations where future dividends are not easily predictable. Explain why a stocks intrinsic value might differ between the total company model and the dividend growth model. Explain the following terms: equilibrium and marginal investor. Identify the two related conditions that must hold in equilibrium. Explain how changes in the risk-free rate, the market risk premium, the stocks beta, and the expected growth rate impact equilibrium stock price. Explain the reasons for investing in international stocks and identify the bets an investor is making when he does invest overseas. Define preferred stock, determine the value of a share of preferred stock, or given its value, calculate its expected return. Chapter 9: Stocks and Their Valuation Learning Objectives 213 Learning Objectives: 8 - 214 Harcourt Brace & Company Lecture Suggestions This chapter provides important and useful information on common and preferred stocks. Moreover, the valuation of stocks reinforces the concepts covered in Chapters 2, 7, and 8, so Chapter 9 extends and reinforces concepts discussed in those chapters. We begin our lecture with a discussion of the characteristics of common stocks and how stocks are valued in the market. Models are presented for valuing constant growth stocks, zero growth stocks, and nonconstant growth stocks. We conclude the lecture with a discussion of preferred stocks. What we cover, and the way we cover it, can be seen by scanning the slides and Integrated Case solution for Chapter 9, which appears at the end of this chapter solution. For other suggestions about the lecture, please see the Lecture Suggestions in Chapter 2, where we describe how we conduct our classes....
View Full Document

Page1 / 37

Chapter09 - Chapter 9 Stocks and Their Valuation Learning...

This preview shows document pages 1 - 4. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online