CHARLES J. CORRADO_FUNDAMENTALS OF INVESTMENTS - CHAPTER 6 PPS

CHAPTER 6Common Stock ValuationA fundamental assertion of finance holds that a security’s value is based onthe present value of its future cash flows. Accordingly, common stockvaluation attempts the difficult task of predicting the future. Consider that theaverage dividend yield for large-com[r]

Municipal notes and bonds are intermediate- to long-term interest-bearing obligations of stateand local governments or agencies of those governments. The defining characteristic of municipalnotes and bonds, often called “munis,” is that coupon interest is usually exempt from federal incometax. Conse[r]

would end up outside the range -27.93 percent to 53.59 percent [12.83% ± (2 × 20.38%)].The Second LessonOur observations concerning year-to-year variability in returns are the basis for our secondlesson from financial market history. On average, bearing risk is handsomely rewarded, but in a givenyea[r]

Operating cash flow is the first of three cash flow categories reported in the cash flowstatement. The second and third categories are investment cash flow and financing cash flow.Investment cash flow includes any purchases or sales of fixed assets and investments. For example,Borg's purchase of Kli[r]

a loan-consent agreement, which gives your broker the right to loan shares held in the account. Ifshares you own are loaned out, you still receive any dividends or other distributions and you can sellthe stock anytime if you wish. In other words, the fact that some of your stock may have been loaned[r]

To find out, all we can do is try different yields until we come across the one that producesa price of $900. However, we can speed things up quite a bit by making an educated guess using whatwe know about bond prices and yields. We know the yield on this bond is greater than its 6 percentcou[r]

corporations and governments, that promise to make fixed payments according to apreset schedule.)The words "note" and "bond" are generic terms for fixed-income securities, but "fixed-income" is really more accurate. This term is being used more frequently as securities are increasinglybeing created[r]

15.1a The argument supporting put-call parity is based on the fundamental principle of finance thattwo securities with the same riskless payoff on the same future date must have the same price.Restate the demonstration of put-call parity based on this fundamental principle. (Hint: Startby recalling[r]

CHECK THIS13.3a Look up prices for Freddie Mac (FHLMC) and Fannie Mae (FNMA) common stock undertheir ticker symbols FRE and FNM in the Wall Street Journal.(marg. def. prepayment rate The probability that a mortgage will be prepaid duringa given year.)13.4 Public Securities Association Mortgage Prepa[r]

Issue amount $20 million Note issue total face value is $20 millionIssue date 12/15/98 Notes offered to the public in December 1998Maturity date 12/31/03 Remaining principal due December 31, 2003Face value $1,000 Face value denomination is $1,000 per noteCoupon interest $100 per annum Annual coupons[r]

discount yield:With a little algebra, we see that the discount yield is 6 percent.We convert this to a bond equivalent yield as follows: The bond equivalent yield is thus 6.145 percent.Finally, to get the EAR, note that there are 6.0833 sixty-day periods in a year, soThis example illustrates[r]

Once again, we see the impact of diversification. This portfolio has a standard deviation of 38.47percent, which is less than either of the standard deviations on the two assets that are in the portfolio.Example 17.5 Portfolio Variance and Standard Deviation. In the example we just examined, Stock A[r]

The final three numbers are also of interest to technicians. The first, labeled “Closing tick” isthe difference between the number of shares that closed on an uptick and those that closed on a downtick. From our discussion of the NYSE short sale rule in Chapter 5, you know that an uptick occurswhen[r]

stockholders assure that effective control of the corporation will remain in their hands.After much haggling, your investment banker agrees to underwrite the stock issue bypurchasing the other 2 million shares from your company for $10 per share. The net effect of thistransaction is that you have so[r]

such charges are called no-load funds.(marg. def. front-end load A sales charge levied on purchases of shares in somemutual funds.)When you purchase shares in a load fund, you pay a price in excess of the net asset value,called the offering price. The difference between the offering price and the ne[r]

4. The delivery or settlement procedure,5. The futures price.First, a futures contract requires that the underlying commodity or financial instrument beclearly identified. This is stating the obvious, but it is important that the obvious is clearly understoodin financial transactions.Second, the siz[r]

markets.24 Chapter 18Example 18.5 Buy Low, Sell High. A security is said to be overvalued relative to another securityif its price is too high given its expected return and risk. Suppose you observe the following situation:Security Beta ExpectedReturnMelan Co. 1.3 14%Choly Co. .8 10The risk-free rat[r]

dollars _r£_ = Risk-free interest rate for British pounds _S$/£_ = Spot exchange rate stated as a dollar price of the British pound _F_T$/£ = Forward exchange rate for delivery T years f[r]

Chapter 6: Web SecuritySecurity+ Guide to Network Security Fundamentals Second EditionObjectives•Protect e-mail systems•List World Wide Web vulnerabilities•Secure Web communications•Secure instant messagingProtecting E-Mail Systems•E-mail has replaced the fax machine as the primary com[r]

of a regular semester does not allow to cover all that is included in thefirst six chapters. Topics that can be skipped, if time so dictates, are thediscussions, in Chapter 4, of workspaces and performance indices, and thesection on simulation in Chapter 6. Under strict time constraints, the w[r]