BU111 Lecture Notes - Lecture 6: Money Supply, Name Day
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BU111 Full Course Notes
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No money is given only to shareholders but to all members who hold accounts. Stocks (from a firm"s perspective bond financing is more attractive due to tax. Pre-emptive right: existing shareholders have the option to buy new stocks when issued first to maintain % of ownership. Preferred stocks (mix between bond an common stock) Paid after debt to banks and bondholders but before common stocks. Have a thinner market compared to common stocks. High low stock name day high day low closing price change volume traded. Leverage consists on engaging in a transaction that requires more money than available to generate future benefits. Gain: profits can be infinite in theory. Risks: interest, margin calls if price falls. Gain: price of the short sell is kept completely if the stock reaches 0. Loss: infinite since the stock can rise w/o limit. Risks: might me forced to cover the short; dividends may be declared while the short is held.
