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departments.
Shareholder Wealth number of shares outstanding times the market price per
share.
Stock Prices based on cash flows expected in future years, not just in current
year.
True returns and risk that investors would expect if they had all of the
information that existed about a company. (Stocks Intrinsic Value)
Perceived means what investors expect, given the limited information they
actually have. (Stocks Market Price)
Market Price the stock value based on perceived but possibly incorrect
information as seen by the marginal investor.
Marginal Investor an investor whose views determine the actual stock price.
Equilibrium the situation in which the actual market price equals the intrinsic
value, so investors are indifferent between buying or selling a stock.
Sarbanes-Oxley Bill requires the CEO and CFO of a firm to certify that the
firms financial statements are accurate.
Business Trends: