Outline of Session Outline of Session 4

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Common Stock Common Stock (or just “Stock”) is a security, which represents ownership in a company. Owning a stock entitles you to some share of a company’s profits (or dividends). Shareholders are last in line to claim against a company’s assets in the event of bankruptcy. Investment in stocks therefore is considered more risky than investment in bonds. Investment returns in stocks include capital gains/losses and dividends. © 2009 Charn Soranakom, Ph.D. Last Updated: June 11, 2009 © 2009 Charn Soranakom, Ph.D. Session 4 | Slide 10 of 19
Stocks and the Stock Market Stocks are traded in the stock market. You need a broker to trade stocks. Know the differences between Primary market and Secondary market Auction market and Dealer market Capital gains/losses and dividends Understand Bids, asks, and prices P/E and P/B ratios Dividend yield Commissions and taxes Last Updated: June 11, 2009 © 2009 Charn Soranakom, Ph.D. Session 4 | Slide 11 of 19
Page 1 and 2: Outline of Session 4 Three Basic Va
Page 3 and 4: Bonds Bonds are one type of fixed i
Page 5 and 6: Calculation of Bond Price Example:
Page 7 and 8: These curves are convex. Last Updat
Page 9: Interest Rate Risk (or Price Risk)
Page 13 and 14: P P 0 1 = = Div 1 ( 1 + r ) ( 1 + r
Page 15 and 16: Where Does g Come From? Year 1 2 3
Page 17 and 18: Preferred stock is classified as e
Page 19: In−class Exercises Let’s do som

Outline of Session Outline of Session 4

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