Management and Organizational Studies 2310A/B Chapter Notes - Chapter 7: Reaction Rate Constant, Expected Return, Valuation Using Multiples

• School: Western University
• Department: Management and Organizational Studies
• Course: Management and Organizational Studies 2310A/B
• Professor: Danny Morrison

Document Summary

Preffered stock: preference over common shares in the distribution of dividends or liquidation. Cumulative versus non-cumulative preferred stock: cumulative preferred stock: any unpaid dividends are carried forward. 7. 2 dividend discount model: the valuation implies that to value any security, we must determine the expected cash flows that an investor will receive from owning it. If the current stock price were less than this amount, the cost would be less than the. Pv of the benefits, so investors would rush and buy it, driving up the stock prive. Is stock price exceeded this amount, selling it would be attractive, and stock prive would fall. We divide the capital gain by current stock prive to express capital gain as percentage: the sum of dividend yield and the capital gain rate is called total return of stock. If stock lower expected return, investors would sell the stock and drive down its price until equation was satisfied.