MGF 301 Study Guide - Midterm Guide: Cash Flow, Stock Valuation, Secondary Market

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Interest rates and bond prices: price of bond = present value of all cash flows generate by the bond (coupons and face value) discounted at the required rate of return, cpn = coupon. Investment grade- bonds rated baa or above by moody"s or bbb or above by standard & poor"s: junk bonds- bond with a rating below baa or bbb, corporate bonds, zero coupon bonds, floating-rate bonds, convertible bond. Chapter 7: valuing stocks: primary market- market for sale of new securities by corporations. P t t: expected return- percentage yield investor forecasts from a specific investment over a set period of time- holding period return (hpr) 0: forecast no growth, and plan to hold out stock indefinitely- value the stock as. 1 r: constant- growth ddm- version of dividend growth model where dividends grow at constant rate (gordon growth model)

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