Outline of Session Outline of Session 4
Outline of Session Outline of Session 4 Outline of Session Outline of Session 4
Factors Affecting Stocks’ Prices Change in forecast of earnings and dividends (EPS and DPS) Change in forecast of growth (g) Change in expectation of rate of return (r S ) Supply and demand Price manipulation Psychology factor Market sentiment Last Updated: June 11, 2009 © 2009 Charn Soranakom, Ph.D. Session 4 | Slide 16 of 19
Preferred stock is classified as equity. Preferred Stock owner usually cannot vote, but may be allowed to vote if dividends have not been paid for some time. (usually) pays fixed dividends as a percentage of par value. has higher priority of claims against company’s assets and profits (dividends) over common stock. dividends can be cumulative or noncumulative. has characteristics of a debt, but dividend is not tax−deductible. is not popular among investors. Therefore, corporations do not want to issue this type of security. Last Updated: June 11, 2009 © 2009 Charn Soranakom, Ph.D. Session 4 | Slide 17 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 and 10: Interest Rate Risk (or Price Risk)
- Page 11 and 12: Stocks and the Stock Market Stocks
- Page 13 and 14: P P 0 1 = = Div 1 ( 1 + r ) ( 1 + r
- Page 15: Where Does g Come From? Year 1 2 3
- Page 19: In−class Exercises Let’s do som
Preferred stock<br />
is classified as equity.<br />
Preferred Stock<br />
owner usually cannot vote, but may be allowed to vote if<br />
dividends have not been paid for some time.<br />
(usually) pays fixed dividends as a percentage <strong>of</strong> par value.<br />
has higher priority <strong>of</strong> claims against company’s assets and<br />
pr<strong>of</strong>its (dividends) over common stock.<br />
dividends can be cumulative or noncumulative.<br />
has characteristics <strong>of</strong> a debt, but dividend is not<br />
tax−deductible.<br />
is not popular among investors. Therefore, corporations do not<br />
want to issue this type <strong>of</strong> security.<br />
Last Updated: June 11, 2009 © 2009 Charn Soranakom, Ph.D. <strong>Session</strong> 4 | Slide 17 <strong>of</strong> 19
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