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| A document giving one person the authority to act for another, typically the power to vote shares of common stock. |
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| An attempt by a person or group to gain control of a firm by getting its stockholders to grant that person or group the authority to vote its shares to replace the current management. |
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| An action whereby a person or group succeeds in ousting a firm's management and taking control of the company. |
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| A provision in the corporate charter or bylaws that gives common stockholders the right to purchase on a pro rata basis new issues of common stock (or convertible securities). |
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| Common stock that is given a special designation such as Class A or Class B to meet special needs of the company. |
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| Stock owned by the firm's founders that has sole voting rights but restricted dividends for a specified number of years. |
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| A representative investor whose actions reflect the beliefs of those people who are currently trading a stock. It is the marginal investor who determines a stock's price. |
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| The price at which a stock sells in the market. |
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| The expected rate of growth in dividends per share. |
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| The minimum rate of return on a common stock that a stockholder considers acceptable. |
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| The rate of return on a common stock that a stockholder expects to receive in the future. |
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| Actual (Realized) Rate of Return |
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Definition
| The rate of return on a common stock actually received by stockholders in some past period. |
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Definition
| The expected dividend divided by the current price of a share of stock. |
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| The capital gain during a given year divided by the beginning price. |
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Definition
| The sum of the expected dividend yield and the expected capital gains yield. |
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| Constant Growth (Gorgon) Model |
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Definition
| Use to find the value of a constant growth stock. |
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Definition
| A common stock whose future dividends are not expected to grow at all; that is, g=0. |
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| Supernormal (Nonconstant) Growth |
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| The part of the firm's life cycle in which it grows much faster than the economy as a whole. |
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| The date when the growth rate becomes constant. At this date, it is no longer necessary to forecast the individual dividends. |
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| The value at the horizon date of all dividends expected thereafter. |
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Term
| Corporate Valuation Model |
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Definition
| A valuation model used as an alternative to the discounted dividend model to determine a firm's value, especially one with no history of dividends, or the value of a division of a larger firm. The corporate model first calculates the firm's free cash flows, then finds their present values to determine the firm's value. |
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