ITM 102 Study Guide - Liquid Oxygen, Financial Instrument, List Of Bus Routes In Staten Island

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Lo1 how stock prices depend on future dividends and dividend growth. Lo2 the characteristics of common and preferred stocks. Lo3 the different ways corporate directors are elected to office. Lo4: the stock market quotations and the basics of stock market reporting. Answers to concepts review and critical thinking questions (lo1) the value of any investment depends on its cash flows; i. e. , what investors will actually receive. Young, growing companies with profitable investment opportunities are one example; another example is a company in financial distress. This question is examined in depth in a later chapter. (lo1) the general method for valuing a share of stock is to find the present value of all expected future dividends. The dividend growth model presented in the text is only valid (i) if dividends are expected to occur forever, that is, the stock provides dividends in perpetuity, and (ii) if a constant growth rate of dividends occurs forever.

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