Brealey Myers公司金融原理讲义Chapter_04.ppt

Slides by Matthew Will Topics Covered How Common Stocks are Traded How To Value Common Stock Capitalization Rates Stock Prices and EPS Discounted Cash Flows and the Value of a Business Stocks Stock Market Common Stock - Ownership shares in a publicly held corporation. Secondary Market - market in which already issued securities are traded by investors. Dividend - Periodic cash distribution from the firm to the shareholders. P/E Ratio - Price per share divided by earnings per share. Stocks Stock Market Book Value - Net worth of the firm according to the balance sheet. Liquidation Value - Net proceeds that would be realized by selling the firm’s assets and paying off its creditors. Market Value Balance Sheet - Financial statement that uses market value of assets and liabilities. Valuing Common Stocks Expected Return - The percentage yield that an investor forecasts from a specific investment over a set period of time. Sometimes called the market capitalization rate. Valuing Common Stocks Example: If Fledgling Electronics is selling for $100 per share today and is expected to sell for $110 one year from now, what is the expected return if the dividend one year from now is forecasted to be $5.00? Valuing Common Stocks The formula can be broken into two parts. Dividend Yield + Capital Appreciation Valuing Common Stocks Capitalization Rate can be estimated using the perpetuity formula, given minor algebraic manipulation. Valuing Common Stocks Return Measurements Valuing Common Stocks Dividend Discount Model - Computation of today’s stock price which states that share value equals the present value of all expected future dividends. Valuing Common Stocks Dividend Discount Model - Computation of today’s stock price which states that share value equals the present value of all expected future dividends. H - Time horizon for your investment. Valuing Common Stocks Valuing Common Stocks Example Current forecasts are for XYZ Company to pay dividends of $