informed decisions about what stocks to buy or sell. Without fundamental value‚ one is set adrift in a sea of random short-term price movements and gut feelings. Before we can value a share of stock‚ we have to have some notion of what a share of stock is. A share of stock is not some magical creation that ebbs and flows like the tide; rather‚ it is the concrete representation of partial ownership of a publicly traded company. If XYZ Corporation has 1 million shares of stock outstanding and we hold
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Stock exchange A stock exchange is a form of exchange which provides services for stock brokers and traders to trade stocks‚ bonds‚ and other securities. Stock exchanges also provide facilities for issue and redemption of securities and other financial instruments‚ and capital events including the payment of income and dividends. Securities traded on a stock exchange include shares issued by companies‚ unit trusts‚ derivatives‚ pooled investment products and bonds. To be able to trade a security
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Preferred Stock is referred to as preferred‚ because there is a higher claim against the stock than common stocks. There is a difference from preferred stocks and common stock when it comes to their dividends and liquidation. A preferred stockholder would receive their dividends sooner than common stockholders. This makes it so that if a preferred stockholder were to decide to opt out of paying their dividends than the common stock will not have a dividend. “The best way to think of preferred stock is as
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With Preferred stock‚ there are of a variety of features that can be added to in order to either increase its attractiveness to investors‚ or to make it easier for the issuing company to buy back. Some company uses this to gain access to cash fast and they can control their payback. Preferred stock can have a lot of features add to it but here are the four major categories they will fall into: Callable this feature gives a company the ability to buy back preferred stock on specific dates and at
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Stock Valuation at Ragan‚ Inc Nautilus Marine Enginees negative EPS wer the result of an accouting write off last year. Without the write-off‚ EPS for the company would have been 1.97. Last year‚ Ragan had an EPS of 5.08 and paid a dividend to Carrington and Genevieve of 320‚000 each. The company also had a return on equity of 25 percent. Larissa tells Dan that required return for Ragan of 20 percent is appropriate. 1. Assuming the company continues its current growth rate‚ what is the value
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the proposed employee stock option plan? In a typical stock option plan‚ the employee is offered a specific number of shares which he/she can exercise (buy) at some specified time in the future. The price at which the employee can buy the stock is equal to the market price at the time the stock option was granted (grant price). The employee ’s gain is equal to the market value of the stock at the time it is exercised‚ less the grant price. If the market price of the stock remains the same or decreases
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Chapter 10 Stocks and Their Valuation Learning Objectives Solutions to End-of-Chapter Problems 10-1 D0 = $1.25; g1-3 = 6%; gn = 4%; D1 through D5 = ? D1 = D0(1 + g1) = $1.25(1.06) = $1.3250. D2 = D0(1 + g1)(1 + g2) = $1.25(1.06)2 = $1.4045. D3 = D0(1 + g1)(1 + g2)(1 + g3) = $1.25(1.06)3 = $1.4888. D4 = D0(1 + g1)(1 + g2)(1 + g3)(1 + gn) = $1.25(1.06)3(1.04) = $1.5483. D5 = D0(1 + g1)(1 + g2)(1 + g3)(1 + gn)2 = $1.25(1.06)3(1.04)2 = $1.6103. 10-2 = $1.35/(12%
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A stock market or equity market is a public (a loose network of economic transactions‚ not a physical facility or discrete) entity for the trading of company stock (shares) and derivatives at an agreed price; these are securities listed on a stock exchange as well as those only traded privately. The size of the world stock market was estimated at about $36.6 trillion at the start of October 2008.The total world derivatives market has been estimated at about $791 trillion face or nominal value‚[2]
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The ridiculous land price in HK Hong Kong is an amazing place. Due to its unique history and location‚ Hong Kong became an international city. Most of the rich companies in Hong Kong rely on the estate’s business. The fact is that Hong Kong is just a small place‚ land supply is extremely limited. But the population never stops growing. In this situation‚ businessmen keep rising the land price or the rent. As government needs more income to enrich the reserve and keeps providing land piece to the
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A joint-stock company is a business entity which is owned by shareholders. Each shareholder owns the portion of the company in proportion to his or her ownership of the company’s shares (certificates of ownership). [1] This allows for the unequal ownership of a business with some shareholders owning a larger proportion of a company than others. Shareholders are able to transfer their shares to others without any effects to the continued existence of the company. [2] In modern corporate
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