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43 Cards in this Set

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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.
Proxy Fight
An attempt by a person or group to gain control of a firm by getting its stockholders to grant that person or group the authority to vote their shares to replace current management.
Takeover
An action whereby a person or group succeeds in ousting a firm's management and taking control of the company.
Preemptive Right
A provision in the corporate charter or bylaws that gives common stockholders the right to purchase on a pro rata basis new issues of common stock (or convertible securities.
Classified Stock
Common stock that is given a special designation, such as Class A, Class B, and so forth, to meet special needs of the company.
Founders' Shares
Stock owned by the firm's founders that has sole coting rights but restricted dividends for a specified number of years.
Market Price
The price at which a stock sells in the market.
Intrinsic Value
The value of an asset that, in the mind of a particular investor, is justified by the facts;Po may be different from the asset's current market price.
Growth Rate (g)
The expected rate of growth in dividends per share.
Required Rate of Return
The minimum rate of return on a common stock that a stockholder considers acceptable.
Expected Rate of Return
The rate of return on a common stock that a stockholder expects to receive in the future.
Actual Realized Rate of Return
The rate of return on a common stock actually received by stockholders in some past period. may be greater or less than and/or .
Dividend Yield
The expected dividend divided by the current price of a share of stock.
Capital Gains Yield
The capital gain during a given year divided by the beginning price.
Expected Total Return
The sum of the expected dividend yield and the expected capital gain yield.
Constant Growth (Gordon Model)
Used to find the value of a constant growth.
Zero Growth Stock
A common stock whose future dividends are not expected to grow at all; that is g=0.
Supernormal (Nonconstant) Growth
The part of the firm's life cycle in which it grows much faster than the economy as a whole.
Terminal Date (Horizon Date)
The date when the growth rate becomes constant. At this date it is no longer necessary to forecast te individual dividends.
Horizon (Terminal) Value
The value at the horizon date of all dividend expected thereafter.
Expected Rate of Return
The rate of return on a common stock that a stockholder expects to receive in the future.
Actual Realized Rate of Return
The rate of return on a common stock actually received by stockholders in some past period. may be greater or less than and/or .
Dividend Yield
The expected dividend divided by the current price of a share of stock.
Capital Gains Yield
The capital gain during a given year divided by the beginning price.
Expected Total Return
The sum of the expected dividend yield and the expected capital gain yield.
Constant Growth (Gordon Model)
Used to find the value of a constant growth.
Zero Growth Stock
A common stock whose future dividends are not expected to grow at all; that is g=0.
Supernormal (Nonconstant) Growth
The part of the firm's life cycle in which it grows much faster than the economy as a whole.
Terminal Date (Horizon Date)
The date when the growth rate becomes constant. At this date it is no longer necessary to forecast te individual dividends.
Horizon (Terminal) Value
The value at the horizon date of all dividend expected thereafter.
Expected Rate of Return
The rate of return on a common stock that a stockholder expects to receive in the future.
Actual Realized Rate of Return
The rate of return on a common stock actually received by stockholders in some past period. may be greater or less than and/or .
Dividend Yield
The expected dividend divided by the current price of a share of stock.
Capital Gains Yield
The capital gain during a given year divided by the beginning price.
Expected Total Return
The sum of the expected dividend yield and the expected capital gain yield.
Constant Growth (Gordon Model)
Used to find the value of a constant growth.
Zero Growth Stock
A common stock whose future dividends are not expected to grow at all; that is g=0.
Supernormal (Nonconstant) Growth
The part of the firm's life cycle in which it grows much faster than the economy as a whole.
Terminal Date (Horizon Date)
The date when the growth rate becomes constant. At this date it is no longer necessary to forecast te individual dividends.
Horizon (Terminal) Value
The value at the horizon date of all dividend expected thereafter.
Total Company or Corporate Valuation Model
A valuation model used as an alternative to the dividend growth model to determine the value of a firm, especially one with no history of dividends or a division of larger firm. This model first calculates the firm's free cash flows and then finds their present value to determine the firm's value.
Marginal Investor
A representative investor whose actions reflect the beliefs of those people who are currently trading a stock. It is the marginal investor who determines a stock's price.
Equilibrium
The condition under which the expected return on a security is just equal to its required return, . Also, P=P and the price is stable