fin 335 ch 7

4 types of members of the NYSE

- designated market maker DMM -floor brokers -supplemental liquidity providers SLPs

NYSE

-auction market -UTP trade -well set cos more stable -public (ICE)

NASDAQ

-dealers market -trade execution online -stocks high tech volatile public

what is a proxy?

a grant of authority by a shareholder allowing another individual to vote that shareholders share

bid vs ask

bid: max price that a buyer or buyers are willing to pay ask: min price sellers are willing to receive

difference between a securities broker and dealer

broker: an agent who arranges security transactions among investors dealer: an agent who buys and sells securities from inventory

does the value of a share of stock depend on how long you expect to keep it

can not be concluded, it depends upon the dividend growth pattern of company.

what are the relevant cash flows for valuing a share of common stocks

future dividends are the relevant cash flows for evaluating the value of a share of common stock. the present value stock prices is equal to the present value of all future dividends of company.

what is the value of a share of stock when the dividend grows at a constant rate

p0= d1/R-g

what rights do stockholders have?

share proportionally in dividends paid - the right to sharee proportionally in assets remaining after liabilities have been paid -right to vote on stockholders matters of great importance -preemptive right ( share proportionally in any new stock sold)

why is preferred stock called preferred ?

stock w divided priority over common stock, normally with a fixed dividend rationed sometimes without voting rights. - - holders must receive a dividend before holders of common shares

what is a target price on a stock

target price is an estimate of a stocks future price based upon an earning forecast and assumed valuation methods. Determined by looking at assumptions and comparing to historical trends.