Equity Flashcards
This deck only covers KEY definitions. Read Notion for key concepts, maths, and theories.
Define a common stock.
An ownership stake of a corporation.
What is the use of stock indexes?
Used to measure the performance of a particular group of stocks.
Define quoted bid.
The highest price that a market maker offers to pay for the stock. Investors sell at the bid price.
Define quoted ask.
The lowest price at which a market maker will sell a stock. Investors buy at the ask price.
Define market order.
When a stock buy or sell order is immediately executed at the current market price.
Define dividend discount model.
A valuation approach based on future dividend income.
Define constant growth model.
A valuation method based on constantly growing dividends, g > i.
What is a preferred stock?
A hybrid security that has characteristics of both long term debt and common stock.
Define variable growth rate.
A valuation method used when a firm’s current growth rate is expected to change at some time in the future, g > i.
