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19 Cards in this Set
- Front
- Back
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Proxy |
A document giving one person the authority to act for another, typically the power to vote shares of common stock |
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proxy fight |
An attempt by a person or group to gain control of the firm by getting it's stockholders to grant that a person or group the authority to vote its shares to replace the current management |
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Take over |
An action whereby a person or group succeeds in ousting a firm's management and taking control of the company |
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Preemptive right |
A provision in the corporate character or bylaws that gives common stockholders the right to purchase on a pro rata basis new issues of common stock |
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Classified stock |
Common stock that is given a special designation such as Class A or Class B to meet special needs of the company |
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Founders shares |
Stock owned by the firm's founders that enables them to maintain control over the company without having to own a majority of stock |
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Marginal investor |
A representative investor whose actions reflect the beliefs of those people who are currently trading a stock. It's the marginal investor who determines a stock's price |
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Market price, P Sub 0 |
The price at which a stock sells in the market |
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Growth rate, G |
The expected rate of growth in dividends per share |
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Required rate of return, R sub s |
The minimum rate of return on a common stock that a shareholder considers acceptable |
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Expected rate of return, R carrot sub s |
The rate of return on a common stock that a stockholder expect to receive in the future |
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Actual rate of return, R Bar sub s |
The rate of return on a common stock actually received by the stockholders in some past., it may be greater than the expected rate of return or the required rate of return |
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Dividend yield |
The expected dividend divided by the current price of a share of stock |
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Capital Gains yield |
The capital gain during a given year divided by the beginning price |
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Expected total return |
The sum of the expected dividend yield and expected capital gains yield |
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Constant growth model or Gordon model |
Used to find the value of a constant growth stock |
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Supernormal growth or non consistent growth |
The part of the firm's life cycle in which it grows much faster than the economy as a whole |
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Horizon date or terminal date |
The date when the growth rate becomes constant. At this date it is no longer necessary to forecast the individual dividends |
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Horizon value or continuing value |
The value at the horizon date of all dividends expected thereafter |
