ACCT-311 Lecture Notes - Lecture 2: Initial Public Offering, Interest Rate Parity, Interest Rate Risk
1 Apr 2016
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Glossary 747 average rate of inflation expected over the life of the security 17 information content, or signalling, hypothesis a theory that holds that investors regard dividend changes as signals of management forecasts. Thus, when dividends are raised, this is viewed by investors as recognition by management of future earnings increases. Therefore, if a firm"s stock price increases with a dividend increase, the reason may not be investor preference for dividends but expectations of higher future earnings. This market is often termed the initial public offering market 1. Irr measures the rate of return on a project, but it assumes that all cash flows can be reinvested at the irr rate 29 international bond any bond sold outside the country of the borrower. Investment banking houses assist in the design of corporate securities and then sell them to investors in the primary markets 1 investment-grade bond securities with ratings of baa/
