Chapter 8 & 13 Flashcards
1
Q
Common Stock
A
Voting rights
2
Q
Preferred stock
A
Get $ before common stockholders in case of bankruptcy and dividends.
No ownership or voting rights
3
Q
Cost of common stock
A
r in PV = d1/r-g
4
Q
Cost of preferred stock
A
r in PV =D/r
5
Q
Beta
A
Measures how likely that the stock will follow the market.
Measures systematic risk
6
Q
B = 0
A
Treasury bond, risk free
7
Q
B > 1
A
More risky
8
Q
B < 1
A
Less risky
9
Q
Security market line slope
A
market risk premium
[E(Rmkt) - Rfr]
