9ed FIN421 PP_CH001

Money 1 15 i dont recommend you try that stock dont

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Unformatted text preview: y manager out of 6000. money 1-15 I don’t recommend you try that stock don’t picking technique…it is best left to the professionals. the Does anyone know the stock Raven Does picked? 1-16 1-17 Class Dartboard Portfolio We’ll need some We’ll volunteers! Anyone good at darts? good Lets keep track of: Stock Symbol 1. 2. 3. 4. 5. Name & exchange Closing 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 dividend K = firm’s discount rate (or cost of capital) CAPM k = rf + B(E(Rm)-rf) or use the 3 factor model or (FF96) (FF96) If dividends grow at a constant rate, then If 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 Assets services 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 4,665 303 23,085 25.2% 6.5% 0.4% 32.1% Financial assets Deposits Life insurance reserves Pension reserves Corporate equity Equity in noncor...
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This document was uploaded on 02/27/2014 for the course FIN Derivative at San Diego State.

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