FIN 3715 Chapter : Stock Valuation
Document Summary
Common stock: ownership shares in a publicly held corporation. Primary market: market for the sale of new securities by corporations. Secondary market: market in which already-issued securities are traded among investors: Dividend: periodic cash distributions from the firm to its shareholders. Dividend yield = annual dividend / stock price. Price-earnings (p/e) ratio = stock price / earnings per share: valuing common stocks. Cash payoffs to shareholders = dividends + capital gains or losses. 0 r = expected dividend yield + expected capital appreciation. Example: abc corp. is planning to pay a dividend in the next year. You expect abc"s stock price to be at the end of the year. If our investment horizon is t years, then. Example: both the stock price and the dividend of the abc corp. are expected to grow at. A dividend is expected in the first year.
