Summary
-Cash flows from owning a share of stock come in the form of future dividends
-Zero growth -Share of common stock with a constant dividend
-Constant Growth -dividend grows at a steady rate
-Dividend growth model -model that determines the current price of a stock by its dividend next period divided by discount rate minus the dividend growth rate
-If the growth rate is bigger than the discount rate, then the present value of the dividend gets bigger and bigger
-Nonconstant growth -allows for supernormal growth rates over some finite length of time
-Dividend yield -stocks expected cash dividend divided by its current price. -similar to current yield on a bond
-Capital gains yield -rate at which the value of an investment grows

-Common stock features -shareholders have rights-right to elect directors and control the corporation through this.
-Proxy
-grant of authority granted by a shareholder allowing another individual to vote that shareholders shares
-Other rights -right to share proportionally in dividends paid -right to share proportionally in assets remaining after liabilities have been paid in liquidation. -Right to vote on stockholder matters of great importance
Preferred stock -has preference over common stock in the payment of dividends -Preferred stock is a form of equity from a legal and tax standpoint. -Has a fixed dividend
-The Stock Markets -consists of primary and secondary markets -Primary markets- shares of stock are first brought to the market and sold to investors. -secondary-shares are traded among investors
-Dealer
-agent who buys and sells securities from inventory
-Broker
-agent who arranges security transactions among investors
-The NYSE -the business of NYSE is to attract and process order flow (flow of customer orders to buy and sell stocks) -successful in attracting order