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Related Flashcards
Related Topics
Cards In This Set
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Shareholders own company
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Stocks
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Issued in small denominations and large number of shares outstanding
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Stocks
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Stock holders are _____ ______
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Residual claimants
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Paid last; not sure how much return will be
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Residual claimants
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Stock holders have _______ liability
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Limited
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With limited liability, max amount the stock holder can lose is __________ ________.
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Initial investment
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2 main ways to measure stock market
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Dow jones industrial average
standard and poors composite 500
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Price weighted average
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Dow jones
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Value weighted
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Stsandard and poors composite 500
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Over 5000 companies
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Nasdaq composite
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Most broadly based index
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Wilshire 5000
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Uses of stock market index
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1. provides measure of overall market performance
2. provides benchmark against which to measure performance of indiv stocks and investment strategies
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Why do stocks have value? 2 reasons
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1. b/c they pay dividends
2. b/c they will rise in value and create capital gains
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Why are stocks risky?
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B/c stockholeders are residual claimants
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WRITE DOWN EQUATIONS
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Div discount model ; impact of risk
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