Fundamentals of Corporate Finance (3rd Edition) (Pearson Series in Finance)
Fundamentals of Corporate Finance (3rd Edition) (Pearson Series in Finance)
3rd Edition
ISBN: 9780133507676
Author: Jonathan Berk, Peter DeMarzo, Jarrad Harford
Publisher: PEARSON
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Chapter 14, Problem 8CC
Summary Introduction

Stock price:

Stock price is the highest amount an investor is willing to pay for a saleable stock of a firm. It can be calculated by the formula given below:

Fundamentals of Corporate Finance (3rd Edition) (Pearson Series in Finance), Chapter 14, Problem 8CC , additional homework tip  1

Where,

  • Fundamentals of Corporate Finance (3rd Edition) (Pearson Series in Finance), Chapter 14, Problem 8CC , additional homework tip  2 is enterprise value or present value of expected free cash flows.
  • Fundamentals of Corporate Finance (3rd Edition) (Pearson Series in Finance), Chapter 14, Problem 8CC , additional homework tip  3 is price of the share.

To determine:

The typical stock price reaction to an SEO.

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