11. Stocks

Financial Markets (ECON 252)

The stock market is the information center for the corporate sector. It represents individuals' ownership in publicly-held corporations. Although corporations have a variety of stakeholders, the shareholders of a for-profit corporation are central since the company is ultimately responsible to them. Companies offer dividends, stock repurchases and stock dividends to give profits back to shareholders or to signal information. Companies can also take on debt to raise capital, creating leverage. The Modigliani-Miller theory of a company's leverage in its simplest form implies the leverage ratio doesn't matter, but including bankruptcy costs and tax effects give us a positive theory of the ratio.

00:00 - Chapter 1. Introduction
04:24 - Chapter 2. The Corporation as a "Person"
14:02 - Chapter 3. Shares, Dilutions, and Stock Dividends
31:26 - Chapter 4. Distinguishing Earnings and Dividends, and Getting Money Out of Companies
42:38 - Chapter 5. Stock Repurchases and the Modigliani-Miller Proposition
57:13 - Chapter 6. Corporate Debt and Debt Irrelevance
01:07:58 - Chapter 7. The Lintner Model of Dividends

Complete course materials are available at the Open Yale Courses website: http://open.yale.edu/courses

This course was recorded in Spring 2008.