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Lecture 7

ECON 3K03 Lecture Notes - Lecture 7: Federal Funds Rate, Loss Aversion, Scion Tc


Department
Economics
Course Code
ECON 3K03
Professor
Helene Wagner
Lecture
7

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Copyright © 2014 Pearson Canada Inc.
Chapter 7
THE STOCK MARKET, THE THEORY
OF RATIONAL EXPECTATIONS,
AND THE EFFICIENT MARKET
HYPOTHESIS
Mishkin/Serletis
The Economics
of Money, Banking,
and Financial Markets
Fifth Canadian Edition

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Copyright © 2014 Pearson Canada Inc. 7-2
Learning Objectives
1. Illustrate how stocks are valued as the present value
of dividends
2. Determine how information in the market affects
asset prices: the theory of efficient capital markets,
according to which current asset prices fully reflect all
available information

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Copyright © 2014 Pearson Canada Inc. 7-3
Common Stock
Common stock is the principal way that corporations
raise equity capital
Stockholders have the right to vote and be the residual
claimants of all funds flowing to the firm
Dividends are payments made periodically, usually
every quarter, to stockholders
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