What determines the value of a stock quizlet?
What determines the value of a stock quizlet?
Under the DCF method, the value of a stock is the sum of cash flows, discounted at an appropriate interest rate.
How is a stock’s value determined?
After a company goes public, and its shares start trading on a stock exchange, its share price is determined by supply and demand for its shares in the market. If there is a high demand for its shares due to favorable factors, the price will increase.
How is the value of a share of stock calculated quizlet?
In the free cash flow to equity (FCFE) model, the intrinsic value of a share of stock is calculated as: the present value of future expected FCFE. the present value of future expected FCFE plus net borrowing.
What stock means quizlet?
stock. A share of ownership in a corporation.
What is the required return on equities quizlet?
What is the required return on equities? The expected return necessary to compensate investors for the risk of investing in the stock.
What is company price?
A stock price is a given for every share issued by a publicly traded company. The price is a reflection of the company’s value – what the public is willing to pay for a piece of the company. It can and will rise and fall, based on a variety of factors in the global landscape and within the company itself.
What is stock value?
A value stock is a stock with a price that appears low relative to the company’s financial performance, as measured by such fundamentals as the company’s assets, revenue, dividends, earnings and cash flows.
Which stock valuation method would be most appropriate for a company that is expected to pay a high and growing rate of dividends to its shareholders?
The Gordon growth model (also known as the constant growth model) can be used to value dividend-paying companies in a mature phase of growth. A stable dividend growth rate is often a plausible assumption for such companies.
What is the definition of a growth stock quizlet?
Growth Stock. Are stocks in corporations that reinvest their profit into the business so that it can grow. Emerging Stocks. Stocks in young, often small corporations that have higher overall risk that stocks of companies that have been sucessful for many years are called emerging stocks.
What is a stock economics?
A stock (also known as equity) is a security that represents the ownership of a fraction of a corporation. This entitles the owner of the stock to a proportion of the corporation’s assets and profits equal to how much stock they own. Units of stock are called “shares.”
What is the relationship between stock price and annual earnings?
Relationship between the price of one share of stock and the annual earnings of the company. A measure of a stock’s volatility compared to changes in the overall stock market. Stock price percent change from January 1st.
What are the characteristics of a stock market?
Usually the companies are smaller and transactions occur over an electronic market. Stock market that experiences a general decline in prices of stock. Not all stocks experience a decline in value, but most do. Stock market experiences a general rise in prices and stock trading volume for shares over a period of time.
What is stock?
A general term used to describe all transactions involving the buying and selling of stock shares issued by a company. A share of ownership in the assets and earnings of a business.
What is meant by distribution of earnings paid to stockholders?
Distribution of earnings paid to stockholders. Shares which pay fixed dividends and have precedence over common stock. The fixed value stated on a preferred stock certificate which indicates the dividends which shall be payed to the shareholder. The amount a willing buyer will pay a willing seller for a stock.
