Stock Valuation

ros91585_ch08.qxd 10/29/04 16:22 Page 233 8 rip rating When the product line market unkindly on April 13, 2004, the coarse investment firm of McGraw-Hill, publisher of fine-quality college textbooks, was going for $76.17 per sh be. On that same day, Bank of America, unrivalled of the largest banks in the United States, closed in(p) at $78.50, while eBay, the online auction off company, closed at $74.68. Since the stock prices of these trio companies were so similar, you mightiness expect that the three companies would be offering similar divid closedowns to their stockholders, still you would be wrong. In fact, Bank of America’s yearly dividend was $3.20 per share, McGraw-Hill’s was $1.20 per share, and eBay was stipendiary no dividends at all! As we will expose in this chapter, the dividends currently being pay are cardinal of the primary factors we look at when attempting to mensurate common stocks. However, it is manifest from looking at eBay that current dividends are not the end of the story, so this chapter explores dividends, stock values, and the connection amidst the two. In our previous chapter, we introduced you to coalitions and bond valuation. In this chapter, we turn to the separate major source of financing for corporations, common and like stock.

We first describe the specie flows associated with a share of stock and then go on to develop a precise famous result, the dividend growth model. From there, we ingrain on to examine assorted essential features of common and preferred stock, focusing on stockholder rights. We close out the chapter with a discussion of how shares of stock are traded and how stock prices and other im! portant information are account in the financial press. >> >> 8 PART THREE valuation of prospective Cash Flows 5 Introduction to Valuation: The while evaluate of Money 6 Discounted Cash Flow Valuation 7 Interest Rates and Bond Valuation stock up Valuation SLIDE 8.1 Key Concepts and Skills SLIDE 8.2 Chapter Outline 233 ros91585_ch08.qxd...If you hope to get a full essay, order it on our website: OrderEssay.net

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