Finance...quiz

Front 1

A document giving one person the authority to act for another, typically the power to vote shares of common stock.

Back 1

Proxy

Front 2

An attempt by a person or group to gain control of a firm by getting its stockholders to grant that person or group the authority to vote its shares to replace the current management.

Back 2

Proxy fight

Front 3

An action whereby a person or group succeeds in ousting a firm’s management and taking control of the company.

Back 3

Takeover

Front 4

A provision in the corporate charter or bylaws that gives common stockholders the right to purchase on a pro rata basis new issues of common stock (or convertible securities).

Back 4

Preemtive right

Front 5

Common stock that is given a special designation such as Class A or Class B to meet special needs of the company.

Back 5

Classified stock

Front 6

Stock owned by the firm’s founders that enables them to maintain control over the company without having to own a majority of stock.

Back 6

Founders shares

Front 7

A representative investor whose actions reflect the beliefs of those people who are currently trading a stock. It is the marginal investor who determines a stock’s price.

Back 7

Marginal investor

Front 8

The price at which a stock sells in the market.

Back 8

Market price,po

Front 9

The expected rate of growth in dividends per share.

Back 9

Growth rate, g

Front 10

The minimum rate of return on a common stock that a stockholder considers acceptable.

Back 10

Required Rate of Return,rs

Front 11

The rate of return on a common stock that a stockholder expects to receive in the future.

Back 11

Expected rate of return

Front 12

The rate of return on a common stock actually received by stockholders in some past period; rs may be greater or less than ^ rs and/or rs.

Back 12

Actual (Realized) Rate of Return, rs

Front 13

The expected dividend divided by the current price of a share of stock.

Back 13

Dividend Yield

Front 14

The capital gain during a given year divided by the beginning price.

Back 14

Capital Gains Yield

Front 15

The sum of the expected dividend yield and the expected capital gains yield.

Back 15

Expected Total Return

Front 16

Used to find the value of a constant growth stock

Back 16

Constant Growth (Gordon) Model

Front 17

A common stock whose future dividends are not expected to grow at all; that is, g = 0.

Back 17

Zero Growth Stock

Front 18

The part of the firm’s life cycle in which it grows much faster than the economy as a whole.

Back 18

Supernormal (Nonconstant) Growth

Front 19

The date when the growth rate becomes constant. At this date, it is no longer necessary to forecast the individual dividends.

Back 19

Horizon (Terminal) Date

Front 20

The value at the horizon date of all dividends expected thereafter.

Back 20

Horizon (Continuing) Value

Front 21

A valuation model used as an alternative to the discounted dividend model to determine a firm’s value, especially one with no history of dividends, or the value of a division of a larger firm.

Back 21

Corporate Valuation Model