| 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. |