BU111 Lecture Notes - Lecture 4: Capital Gain, Ath, Stock Valuation
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BU111 Full Course Notes
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Represents debt for issuing corporation or government. Characteristics: legal, binding agreement, fixed rate of return, fixed term principal repaid at maturity, priority over stockholders, secured vs. unsecured (debentures, registered vs. bearer, callable, serial, convertible. Coupon rate + prevailing rates of interest. Interest = coupon rate x face value () Capital gain = face value purchase price. I n t e r e s t + C a p i t a l g a i n: the face value is always in bu 111. Assumes you will hold the bond until maturity. Need to calculate what you made on an annual basis. Characteristics: voting rights, no fixed term, variable return, discretionary payment (dividends, risk. Demand and supply of stock due to negative or positive perceptions/facts. Primary factors: earnings above or below expectations, rumours, general market conditions bull vs. bear markets, economy, interest (especially preferred, speculation bought or sold on belief price will soon move.
