RSM230H1 Lecture Notes - Lecture 7: Nasdaq Composite, Front Running, Nikkei 225
Document Summary
Claim on residual income (net income after expenses and taxes) Provided investors with highest returns and greatest risk. Shareholders have limited liability to the extent of what they have invested. Shareholders: residual claimants - entitled to assets that remain after debt is paid. Company can stop paying dividends without risk of default or bankruptcy (not preferred shares) Rights of any class of shareholders depend on the articles of incorporation and terms under which shares are issued. Dividends not required; declared by bod only after ps are paid. Liquidation: receive residual value - what remains after debt and ps. Reflects expected growth in the earnings of the company & general earnings of the company & general movements in stock market. Bid: someone has put a bid in to buy. Price spread: indicates liquidity in the market (smaller the spread --> more liquid market) P/e ratio - price per share / eps. Eps = net income / # of shares outstanding.
