Stock Market

5 important questions on Stock Market

One-Period Valuation Model

Discount rate: k

Errors in valuation, problems in ...

  1. Estimating growth
  2. Estimating risk
  3. Forecasting dividends

Stock market indexes

Monitor behavior of a group of stocks
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Regulation stock market

  • Require firms to tell truth about their businesses
  • Require brokers, dealers and exchanges to treat investors fairly
Enforcement: SEC

  • Goal SEC: protects investors and maintain integrity of securities markets

Dual class shares

Give owner more voting power

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