Unformatted text preview: y manager out of 6000.
money 1-15 I don’t recommend you try that stock
picking technique…it is best left to
Does anyone know the stock Raven
picked? 1-16 1-17 Class Dartboard Portfolio
We’ll need some
good at darts?
Lets keep track of:
5. Name &
price Number of
injuries 1-18 Before we get started…
A suggestion on how to pick your 5 stocks.
Dividend discount pricing models
P0 = D1/(1+k) + D2/(1+k)2 + …
Dn = dividend in period n
K = firm’s discount rate (or cost of capital)
CAPM k = rf + B(E(Rm)-rf) or use the 3 factor model
If dividends grow at a constant rate, then
P0 = D1/(k-g) Gordon and Shapiro (1956)
If k increases then P decreases – if g increases then P increases
1-19 Investments & Financial Assets
Essential nature of investment
– Reduced current consumption
– Planned later consumption Real Assets
– Assets used to produce goods and
services Financial Assets
– Claims on real assets 1-20 1-21 Balance Sheet – U.S. Households, 2011
Assets $ Billion % Total Real assets Real estate Consumer durables Other Total real assets 18,117
32.1% Financial assets Deposits Life insurance reserves Pension reserves Corporate equity Equity in noncor...
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- Spring '14
- Corporate Finance, Active management