Dividend Paying Stocks and Inflation Go to Google finance and look up: Stock price Return on Average Equity rate for a major company, such as Apple, GE or Ford. You can search for the company by name in search box. To find the ROE scroll down on the right side of the page. What do you find? What would happen to the value of that stock if inflation went up by 2%? Discuss and compare your findings and thoughts with each other.

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Nelly StrackeLv2

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Few IPOs have garnered as much attention as social media giant Facebookâs public offering on May 18, 2012. It was the biggest IPO in Internet history, easily topping Googleâs initial public offering eight years earlier. Letâs take a closer look at the IPO itself, as well as the payoffs to some of Facebookâs early investors.

Begin by navigating to the SEC EDGAR Web site, which provides access to company filings: http://www.sec.gov/edgar.shtml. Choose âSearch for Company Filingsâ and pick search by company name. Enter âFacebookâ and then search for its IPO prospectus, which was filed on the date of the IPO and is listed as filing â424B4â (this acronym derives from the rule number requiring the firm to file a prospectus, Rule 424(b)(4)).

2. Navigate to Google Finance and search for âFacebook.â Determine the closing price of the stock on the day of the IPO (use the âHistorical pricesâ link). What was the first day return? How does this return compare to the typical IPO?

3.Using the data provided by Google Finance, calculate the performance of Facebook in the threemonth post-IPO period. That is, calculate the annualized return an investor would have received if he had invested in Facebook at the closing price on the IPO day and sold the stock three months later. What was the return for a one-year holding period?

4.Prior to the public offering, Facebook was able to raise capital from all the sources mentioned in the chapter. Letâs concentrate on one particular source, Microsoft Corporation.

a. Microsoft made one investment in Facebook, during October 2007. Go to Facebookâs corporate news Web site (http://newsroom.fb.com) and locate the press release announcing this investment. Using the information in that press release and the number of shares owned by Microsoft listed in the IPO prospectus, calculate the per share price Microsoft paid.

b. Calculate the return (expressed on an annual basis) Microsoft earned on its investment up to the IPO (using the IPO price).

c. How much money did Microsoft receive from the IPO?

5. Facebook had only one angel investor, Peter Thiel (the founder of PayPal). Mr. Thiel invested more than once in Facebook, both as an angel and, in later rounds, on behalf of investors in his venture capital firm, Founders Fund. As an angel, Mr. Thiel invested $500,000 in September 2004. Assuming that all the shares he received in the angel round were registered under the name Rivendell One LLC,²⁴ use the information in the prospectus to calculate:

a. The per share price he paid as an angel.

b. The annualized return (using the IPO price) he made on his investment.

c. The amount of angel money Mr. Thiel received from the proceeds of the IPO (that is, from his Rivendell investments alone).

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