Podcast
Questions and Answers
Where the prices of firms’ stocks are established.
Where the prices of firms’ stocks are established.
stock market
2 Basic Types of Market Procedures
2 Basic Types of Market Procedures
physical location stock exchange ; over the counter
Having tangible physical locations that conduct auction markets in designated (“listed”) securities.
Having tangible physical locations that conduct auction markets in designated (“listed”) securities.
physical location stock exchange
A large collection of brokers and dealers, connected electronically by telephones and computers, that provides for trading in unlisted securities.
A large collection of brokers and dealers, connected electronically by telephones and computers, that provides for trading in unlisted securities.
Signup and view all the answers
Includes all facilities needed to conduct security transactions, but the transactions are not made on the physical location exchanges
Includes all facilities needed to conduct security transactions, but the transactions are not made on the physical location exchanges
Signup and view all the answers
Estimate the value of a firm or its security
Estimate the value of a firm or its security
Signup and view all the answers
Methods of valuing a company
Methods of valuing a company
Signup and view all the answers
A company’s equity value should bear some resemblance to other equities in a similar class.
A company’s equity value should bear some resemblance to other equities in a similar class.
Signup and view all the answers
A company’s equity value is determined by the future cash flow projections using net present value.
A company’s equity value is determined by the future cash flow projections using net present value.
Signup and view all the answers
A company’s equity depends on historical prices for completed M&A transactions involving similar companies.
A company’s equity depends on historical prices for completed M&A transactions involving similar companies.
Signup and view all the answers
A company’s equity value is determined based on the fair market value of net assets owned by the company.
A company’s equity value is determined based on the fair market value of net assets owned by the company.
Signup and view all the answers
A company’s equity value is determined based on its previous acquisition cost. This method is only relevant for companies with minimal growth that might have undergone a recent acquisition.
A company’s equity value is determined based on its previous acquisition cost. This method is only relevant for companies with minimal growth that might have undergone a recent acquisition.
Signup and view all the answers
Refers to investor-supplied funds—debt, preferred stock, common stock, and retained earnings.
Refers to investor-supplied funds—debt, preferred stock, common stock, and retained earnings.
Signup and view all the answers
Not included in our definition of capital because they are not provided by investors—they come from suppliers, workers, and taxing authorities as a result of normal operations, not as investments by investors.
Not included in our definition of capital because they are not provided by investors—they come from suppliers, workers, and taxing authorities as a result of normal operations, not as investments by investors.
Signup and view all the answers
Typically defined as the percentage of each type of investor-
supplied capital, with the total being 100%.
Typically defined as the percentage of each type of investor- supplied capital, with the total being 100%.
Signup and view all the answers
