Terms : Hide Images
| 3239990211 | What is the name given to the model that computes the present value of a stock by dividing next year's annual dividend amount by the difference between the discount rate and the rate of change in the annual dividend amount? | Dividend growth model | 0 | |
| 3240097106 | Debt (creditors) | -not an ownership interest -creditor don't have voting rights -interest is considered a cost of doing business and is tax-deductible -creditors have legal recourse if interest or principal payments are missed -excess debt can lead to financial distress and bankruptcy -has a stated maturity date | 1 | |
| 3240099481 | Equity (holders of common and preferred stock) | -ownership interest -common stockholders vote to elect the board of directors and on other issues -dividends are not considered a cost of doing business and are not tax deductible -dividends are not liability of the firm until declared. stockholders have no legal recourse if dividends are not declared -an all-equity firm cannot go bankrupt -no state maturity date | 2 | |
| 3240124521 | common stock | these stockholder true owners; aka residential oweners; recieve leftovers; can be privatley owned, publicly, and closely owned | 3 | |
| 3240132524 | shareholder rights | -voting rights- elect directors "one share one vote" -cumulative voting- board members are elected all at once; good for small share holders -straight voting- each director is elected at one time, cast all votes for each board member, good for large share holders | 4 | |
| 3240134826 | differential classes of shares | each class has different voting rights -super voting shares- mutliple votes per share, insiders maintain control, used for defense against host take over, least preference in distruibution of earnings -nonvoting shares- no voting rights, helps to raise capital, do recieve prefernece -proxy voting- grant of authority by a shareholder to someone else to vote for them. Proxy fight- struggle with management and outsiders. | 5 | |
| 3240172855 | other rights of common stockholders | preemptive right- shareholders asked first sharing proportionately in divs paid shareing proportionately in any liquidation value voting on matters of importance like a merger | 6 | |
| 3240180531 | Dividends | return on shareholder capital -not tax deductible -divs to individuals are considered ordinary income | 7 | |
| 3240187643 | Preferred stock | has precedence over common stock in pymts of divs and liquidation -stated value is the value paid if liquidation occurs -fixed and not voting rights | 8 | |
| 3240194800 | Cumulative dividends | current preferred dividends plus all arrearages (unpaid divs) paid beofere common stock divs | 9 | |
| 3240200907 | Non-cumulative dividends prefferred | doesnt have this and might have a voting right | 10 | |
| 3240202193 | venture capital | early stage, privatly raised capital -angle capitalists -highly risky high reward | 11 | |
| 3240208185 | going publuic | rapid growing companies that require add. capital -go public by selling stock in Primary market | 12 | |
| 3240212557 | Initial Public Offering (IPO) | 1st selling to public | 13 | |
| 3240216466 | Seasonal offering | publically traded company selling add. shares | 14 | |
| 3240217590 | right offering | new shares to exsiting shareholders | 15 | |
| 3240219658 | private placement | new securities are sold to private investors | 16 | |
| 3240222910 | investment baker | underwriter, sell new issue of securities to public -middleman -once sold to primary market it then is traded in secondary market | 17 | |
| 3240238522 | intrinsic value | present value of all future cash flows | 18 | |
| 3240240895 | Dividend growth rate | requires a required rate of return as a discount rate -future dividend payments | 19 | |
| 3240242483 | corporate valuation model | requires a weighted average cost of capical (WACC)as a discount rate -FCF payments | 20 | |
| 3240256033 | P0 | estimated intrinsic value per share | 21 | |
| 3240257408 | Dt | dividend payment | 22 | |
| 3240259289 | D0 | est. payment for that period | 23 | |
| 3240260585 | D1 | estimated paymenty for the next period | 24 | |
| 3240261792 | R | requried return of the shareholders (discount rate) | 25 | |
| 3240264686 | Zero-Growth rate model | company will not chage its dividend pymts and will pay a certain dividend amount forever. applied to preffereed stock - Formula- D/R | 26 | |
| 3240270884 | Constant-Growth Rate | assumes constant dividend growth! -firm will increase its dividend paymentys by a constant % every period. -Used ammoung mature sound companies formula: D1=D0(1+g) Dt=D0(1+g)^t | 27 | |
| 3240283262 | P0 | current price | 28 | |
| 3240284238 | D0 | current dividend payment | 29 | |
| 3240285504 | D1 | dividend payment next period | 30 | |
| 3240286507 | R | Required Return | 31 | |
| 3240286508 | g | dividend growth rate | 32 | |
| 3240287873 | Pt | Dt(1+g)/R-g | 33 | |
| 3240291117 | Variable-growth model | non-constant growth rate -divs do not gown constantly but they are expected to settle down to a constant growth rate | 34 | |
| 3240298824 | Expected Return | =expected divident yield + expected capital gain | 35 | |
| 3240300576 | Expected Return | = expected dividend yield + expected growth rate | 36 | |
| 3240303174 | E[R] | =r=D1/P0+g | 37 | |
| 3240307773 | expected capital gain | =g=E[P1]-P0/P0 | 38 | |
| 3240311235 | price/earnigns multiple (P/E) | calc. target price for next period using est. earnings for next year and appropriate P/E ratio | 39 | |
| 3240314112 | P1 | =E1 P/E | 40 | |
| 3240316130 | If P1| stock is overvalued=sell | 41 | | |
| 3240317557 | if P1>P0 | stock is undervalued=buy | 42 | |
| 3240320548 | Primary market | securiteis are initally sold using investment banker | 43 | |
| 3240323067 | Secondary market | NYSE-New York Stiock Exchange: physical location NASADAQ- Natioal association of securities dealers automated quoation system: online network | 44 | |
| 3240334065 | Other ways to trade securities | Regional exchange, Electronic Communcation Networks ECNs, and over the counter markets(not listed on stock market) | 45 | |
| 3240337966 | Broker | arranges security transactions among investors, no ownership | 46 | |
| 3240342149 | Dealer | buys and sells securities from investors -does take ownership, benefiots from bid-ask spreads | 47 | |
| 3240345377 | bid price | price which dealer is willing to buy | 48 | |
| 3240347056 | Ask price | price which a dealer is willing to sell | 49 | |
| 3240348492 | spread | diff. btw bid and ask prices | 50 | |
| 3240352542 | Designated Market Maker (DMM) | used to be called specialists. work on trade floor. acts as a dealer | 51 | |
| 3240355817 | floor broker | customer oders to buy and sell stock at the best possible price on the floor exchange | 52 | |
| 3240358621 | supplemental liquidity provider | investment firm trading purley on their own account. make a one-side market | 53 |
