Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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Case Study #3: Chapter 6 Business Analysis -
A business can be valued by capitalizing its earnings stream (see example 6.15).
- How might you use the same idea to value securities, especially the stock of large publicly held companies?
- Is there a way to calculate a value that could be compared to the stock’s market price that would tell an investor whether it’s a good buy? (If the market price is lower than the calculated value, the stock is a bargain.)
- What financial figures associated with shares of stock might be used in the calculation. Consider the per share figures and ratios discussed in chapter 3 including EPS, dividends, book value per share, etc.
- Does one measure make more sense than the others?
- What factors would make a stock worth more or less than your calculated value?
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- 37. Lis/are a way to raise capital by selling ownership or equity: A. Issuing Stock B. Seeking Early-stage capital C. Issuing Bonds D. Developing profits E. Seeking a Bank Loan 38. is/are a way to raise capital through borrowing: A. Issuing Stock B. Seeking Early-stage capital C. Issuing Bonds D. Developing profits E. Mutual Funds 39. If a firm's revenues are greater than costs, then the business would be considered:arrow_forwardWhen a firm conducts a seasoned equity offering and uses the proceeds to purchase a portion of the firm's outstanding debt, then the firm's Group of answer choices business risk increases. financial risk decreases. financial risk increases. business risk increases.arrow_forwardwhich one is correct please confirm? QUESTION 37 Which of the following statements is true concerning companies that do not pay dividends? a. The cost of equity capital can be estimated using the Capital Asset Pricing Model. b. The cost of equity capital is equal to the growth short-term rate of earnings per share. c. The dividend capitalization model can be used to determine an accurate cost of equity capital. d. None of these are correctarrow_forward
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