ECON 2560 Chapter 7: Chapter 7 – Econ 2560
2 Nov 2017
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Document Summary
Stocks and stock markets: common stock/common equity/common shares, ownership shares in a corporation, primary market, market for the sale of new securities issued by corporations. Initial public offering (ipo: first offering of stock to general public, seasoned equity offering (seo, sale of additional stock by a public company, secondary markets, markets in which already issued securities are traded among investors. Market values, book values, and liquidation values: book value of equity, net worth of the firm according to the balance sheet, assets liabilities. Includes tangible and intangible assets as well as investment opportunities. Initial book equity per share x return on equity. Investors who attempt to identify undervalued stocks by searching for patterns in past stock prices: random walk, movement of security prices that change randomly, with no predictable trends or patterns, fundamental analysts. Investors who attempt to find mispriced securities by analyzing fundamental information, such as accounting data and business prospects.
