BU283 Lecture Notes - Lecture 1: Stock Valuation, Preferred Stock, Fiduciary
Document Summary
Lo1: understand the primary features of stock and the stock market. Lo2: find the value of a preferred share. Lo3: find the value of a common share. A contract between the firm and an investor that gives the investor a proportion of ownership of the firm"s assets in exchange for a current payment. Shareholders control firm by electing board of directors. Shareholder have a residual claim to firm"s assets. Iv < mp sell or short sell. Iv = mp hold or fairly priced. Based on section 3 (intrinsic and market value) in chapter 10 (stocks (ch. Preferred stock has some characteristics of debt and some characteristics of equity. Typically has no maturity date and pays dividends, but has no voting rights. Typically pays dividends that have preference in over common dividends. Receives preference over common stock if firm is liquidated. The stated value of the security that is not dependent on the market value.
