In this Phase, you will be discussing how equity investments such as common and preferred stock are valued. As in Phase 4, you will be using time value of money and risk and return principles to value these investments as well.
Identify and recommend at least 1 credible Web site that an investor can visit to find the current and past values of equity market indexes, and address at least 3 of the following questions:
- Explain the primary differences between debt and equity capital.
- Discuss the primary differences between preferred and common stock.
- Explain the difference between "book" and "market" value of a stock and why book value is not an appropriate measure of the true value of equity.
- Describe the various methods of estimating the value of common stock and their weaknesses.
- Identify the major U.S. stock exchanges, and discuss their origins.
- Identity the major U.S. equity indexes and the stocks they represent.