corporate finance chapter 7

dividend growth model a model that determines the current price of a stock as its dividend next period divided by the discounted rate less the dividend growth rate
dividend yield a stock’s expected cash dividend divided by its current price
capital gains yield the dividend growth rate, or the rate at which the value of an investment grows
cumulative voting a procedure in which a shareholder may cast all votes for one member of the board of directors
common stock equity without priority for dividends or in bankruptcy
straight voting a procedure in which a shareholder may cast all votes for each member of the board of directors
proxy a grant of authority by a shareholder allowing another individual to vote that shareholder’s shares.
dividends payments by a corporation to shareholders, made in either cash or stock.
preferred stock stock with dividend priority over common stock, normally with a fixed dividend rate, sometimes without voting rights.
primary market the market in which new securities are originally sold to investors.
secondary market the market in which previously issued securities are traded among investors.
dealer an agent who buys and sells securities from inventory
broker an agent who arranges security transactions among investors
member as of 2006, a member is the owner of a trading license on the NYSE
commission brokers NYSE members who execute customer orders to buy and sell stock transmitted to the exchange floor
specialist an NYSE member acting as a dealer in a small number of securities on the exchange floor; often called a market maker
floor brokers NYSE members who execute orders for commission brokers on a fee basis; sometimes called $2 brokers.
SuperDOT system an electronic NYSE system allowing orders to be transmitted directly to the specialist
floor traders NYSE members who trade for their own accounts, trying to anticipate temporary price fluctuations
order flow the flow of customer orders to buy and sell securities
specialist’s post the fixed place on the exchange floor where the specialist operates
inside quotes the highest bid quotes and the lowest ask quotes for a security
electronic communications networks (ECNs) web sites that allow investors to trade directly with one another
stock price the dividend growth model makes the implicit assumption that the _________ ________ will grow at the same constant rate as the dividend. if cash flows on an investment grow at a constant rate through time, the value of that investment grows at the same rate as the cash flows.
No. Investors who don’t like the voting features of a particular class of stock are under no obligation to buy it. is it unfair or unethical for corporations to create classes of stock with unequal voting rights?
stock value the current_________ ________ reflects the risk, timing, and magnitude of all future cash flows, both short-term and long-term.

Leave a Reply

Your email address will not be published. Required fields are marked *