ECON 2020 Lecture Notes - Lecture 16: Dividend Yield, Call Option, Buy Side
Document Summary
Time machine - how to put money in your account right now. Companies to invest in - ibm or standard oil(exxon) Rules: all dividends used to purchase additional shares of the stock. 1950 - 2005: growth measure(avg. per year) 2005 - ,000 (ibm) , ,682,000(standard oil) Applications: save and reinvest ~ dividend reinvestment, look for yield & low beta, no need to chase growth, pay a premium for a growth stocks. Derivatives: derive value from an underlying asset. Calls & puts: buy side ~ option buyer: call option: gives buyer right to purchase asset(stock) at a xed price. !1: put option: buyer has right to sell asset(stock) at xed price, 1 option contract = 100 shares(locks in price of share then you can purchase up to. 100 shares during a time period for a xed price) Monday, march 7, 2016: two party contracts: buyer and seller, value of options contract moves with stock share price.
