Fundamentals of Corporate Finance Third edition Chapter 5 Valuing Stocks Brealey Myers Marcus ndamentals of Corporate Finan Brealey Myers Marcus slides by Matthew will IrwinMcGraw-Hill CThe McGraw-Hill Companies, Inc, 2001
©The McGraw-Hill Companies, Inc.,2001 5- 1 Irwin/McGraw-Hill Chapter 5 Fundamentals of Corporate Finance Third Edition Valuing Stocks Brealey Myers Marcus slides by Matthew Will Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc.,2001
5-2 Topics Covered STocks and the Stock Market →BookⅤ alues, Liquidation Values and Market values O Valuing Common Stocks SImplifying the Dividend Discount Model SGrowth stocks and Income stocks Irwin/McGraw-Hill CThe McGraw-Hill Companies, Inc, 2001
©The McGraw-Hill Companies, Inc.,2001 5- 2 Irwin/McGraw-Hill Topics Covered Stocks and the Stock Market Book Values, Liquidation Values and Market Values Valuing Common Stocks Simplifying the Dividend Discount Model Growth Stocks and Income Stocks
5-3 Stocks Stock Market Primary market- Place where the sale of new stock first occurs Initial Public Offering(IPO)-First offering of stock to the general public Seasoned issue Sale of new shares by a firm that has already been through an IPO Irwin/McGraw-Hill CThe McGraw-Hill Commpanies, Inc, 2001
©The McGraw-Hill Companies, Inc.,2001 5- 3 Irwin/McGraw-Hill Stocks & Stock Market Primary Market - Place where the sale of new stock first occurs. Initial Public Offering (IPO) - First offering of stock to the general public. Seasoned Issue - Sale of new shares by a firm that has already been through an IPO
5-4 Stocks Stock Market Common Stock -Ownership shares in a ublicly held corporation Secondary market- market in which already issued securities are traded by investors Dividend- Periodic cash distribution from the firm to the shareholders P/E Ratio- Price per share divided by earnings per share Irwin/McGraw-Hill CThe McGraw-Hill Commpanies, Inc, 2001
©The McGraw-Hill Companies, Inc.,2001 5- 4 Irwin/McGraw-Hill Stocks & Stock Market Common Stock - Ownership shares in a publicly held corporation. Secondary Market - market in which already issued securities are traded by investors. Dividend - Periodic cash distribution from the firm to the shareholders. P/E Ratio - Price per share divided by earnings per share
5-5 Stocks Stock Market 57776 6000 5000 4481.7 4000 3000 2000 1414.1 1308.6 1000 570.5 305.2 Stock Market Irwin/McGraw-Hill CThe McGraw-Hill Commpanies, Inc, 2001
©The McGraw-Hill Companies, Inc.,2001 5- 5 Irwin/McGraw-Hill Stocks & Stock Market 5777.6 4481.7 1989.5 1414.1 896.1 1067.7 1308.6 570.5 222 305.2 143.2 0 1000 2000 3000 4000 5000 6000 1997 Trading Value ($bil) NYSE Nasdaq London Paris Tokyo German Taiwan Zurich Osaka Toronto Amex Stock Market