ECON 2035 Chapter : Chapter 7 Study Guide
Document Summary
Chapter 7 study guide: the stock market, rational expectations theory and efficient markets hypothesis. Stockholders are residual claimants, meaning that they (receive the remaining cash flow after all other claims are paid) A stockholder"s ownership of a company"s stock gives her the right to ( vote and be the residual claimant of all cash flows) Periodic payments of net earnings to shareholders are known as ( dividends) The value of any investment is found by computing the ( present value of all future cash flows) Using the one-period valuation model, assuming a year-end dividend of sh. 11, an expected sales price of , and a required rate of return of 10%, the current price of. In the one-period valuation model, the value of a share stock depends upon (the present value of both dividends and the expected sales price) In the one-period valuation model, the current stock price increases if (the expected sales price increases)
