Listening log 2 - 09,20

Business FinanceProfessor: Woochan Kim09. 20 (2:00~3:15)

Today constantly I learned valuation of stocks. There are a lot of models to measure stock’s risk and valuation, but Last week and today we learned Dividend Discount Model and Dividend Growth Rate.

Basically in stock, cash flow consists of capital gain and dividend. That is, we can anticipate earnings at capital which happens in present and dividend which happens in the future. So if we want to get a high earning rate, we really care about present value of stocks and we measure expectation of dividend’s quantity appropriately as completely as we can.

By the way, some companies don’t want to give dividend to stock holders, the reason why most big IT companies like the MS usually reinvest their retained earnings. They think reinvestment is better way to compensate to stock holders by increasing their stock’s price at the market. On the other hand, usually tobacco companies don’t need to reinvest too much because they don’t have new area to develop any more except just making taste better and finding the other place where people don’t movement about tobacco’s harm to our body. So they give the dividend through retained earnings to stock holders And there are two rates which are ROE(return on equity) and PER(price earnings ratio). We can anticipate easily stock’s value in the future with them.

This week has only one class because there was a quiz on Tuesday. I didn’t want to take a test because I don’t understand exactly during class and I don’t need to spend extra time to understand each day’s lecture completely because, my current priority is English conversation. So while I take a lecture I usually try to focus on catching main idea and notice which words use in Business and recall my study in Korea.

Anyway I really looked forward to this lecture because recently I am interested in investing stocks. Even though it was really hard to understand models and formulas, it was good to make me remind important foundation of investing stocks again.