TAILIEUCHUNG - Lecture Essentials of corporate finance (2/e) – Chapter 7: Equity markets and stock valuation

The topics discussed in this chapter are equity markets and stock valuation. After completing this unit, you should be able to: Understand how share prices depend on future dividends and dividend growth, be able to compute share prices using the dividend growth model, understand how share markets work, understand how share prices are quoted. | Equity markets and share valuation Chapter 7 Key concepts and skills Understand how stock prices depend on future dividends and dividend growth Be able to compute stock prices using the dividend growth model Understand how corporate directors are elected Understand how stock markets work Understand how stock prices are quoted 7- Copyright 2011 McGraw-Hill Australia Pty Ltd PPTs t/a Essentials of Corporate Finance 2e by Ross et al. Slides prepared by David E. Allen and Abhay K. Singh Chapter outline Ordinary share valuation Some features of ordinary and preference shares The share markets 7- Copyright 2011 McGraw-Hill Australia Pty Ltd PPTs t/a Essentials of Corporate Finance 2e by Ross et al. Slides prepared by David E. Allen and Abhay K. Singh Cash flows for stockholders If you own a share of stock, you can receive cash in two ways: 1. The company pays dividends. 2. You sell your shares, either to another investor in the market or back to the company. As with bonds, the price of the stock is the present value of these expected cash flows. Dividends → cash income Selling → capital gains 7- Copyright 2011 McGraw-Hill Australia Pty Ltd PPTs t/a Essentials of Corporate Finance 2e by Ross et al. Slides prepared by David E. Allen and Abhay K. Singh One-period example Suppose you are thinking of purchasing the stock of Moore Oil Inc. You expect it to pay a $2 dividend in one year. You believe you can sell the stock for $14 at that time. You require a return of 20% on investments of this risk. What is the maximum you would be willing to pay? 7- Copyright 2011 McGraw-Hill Australia Pty Ltd PPTs t/a Essentials of Corporate Finance 2e by Ross et al. Slides prepared by David E. Allen and Abhay K. Singh One-period example (cont.) D1 = $2 dividend expected in one year R = 20% P1 = $14 CF1 = $2 + $14 = $16 Compute the PV of the expected cash flows Calculator: 16 [FV]; 20 [I/Y]; 1 [N]; [CPT] [PV] = 7- Copyright 2011 .

• Tài chính doanh nghiệp
• Corporate finance
• Essentials of corporate finance
• Financial management
• Business finance
• Equity markets
• Stock valuation
• Intermediate corporate finance
• Lecture Intermediate corporate finance
• Tài chính doanh nghiệp
• Corporate valuation
• Value based management
• Fundamentals of corporate finance
• Business organization
• International corporate finance
• Capital market history
• Raising capital
• Financial leverage
• Financial reporting
• Social welfare
• Forward contracts
• The stock markets
• Basic return concepts
• Portfolio theory
• Bond valuation
• Basic stock valuation
• Accounting for financial management
• Analysis of financial statements
• Financial planning
• Forecasting financial statements
• Capital budgeting
• Decision criteria
• Estimating cash flows
• Real options
• Capital structure decisions
• The levered firm
• Cash management
• Financial distress
• Hedging risk
• Warrants and convertibles
• Principles of corporate finance
• Understanding options
• Valuing options
• Financial analysis
• Financial manager
• Financial institutions