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Fundamentals of Corporate Finance, 4/c/e

Fundamentals of Corporate Finance, 4/e

Stephen A. Ross, Massachusetts Institute of Technology
Randolph W. Westerfield, University of Southern California
Bradford D. Jordan, University of Kentucky
Gordon S. Roberts, York University

Stock Valuation

Internet Application Questions


1		An important component of market quality is information disclosure. At this time, several Canadian jurisdictions are considering whether to adopt fair disclosure regulation that would prohibit selective disclosure of information by Canadian companies (e.g., to preferred analysts). The Securities and Exchange Commission has already passed regulation prohibiting selective disclosure in the United States. The details of this ruling, called Regulation FD, are found on SEC's Final Rules website. Discuss at least one argument against adoption of Regulation FD in Canada.



2		Stock valuation is difficult because dividends are difficult to forecast. Go to Petro-Canada's website and click on Investors. Use the information provided and the dividend growth model to estimate the implied growth for Petro-Canada's dividends. Is this reasonable? Can you form similar conclusion by looking at Petro-Canada's P-E ratio?



3		Barclays Global Investors has recently started an exchange traded equity fund, i60. The i60 trades on the Toronto Stock Exchange and invests in 60 firms that comprise the S&P/TSE 60 Index. Explain the advantage of investing in exchange traded funds relative to buying the stocks outright, and relative to buying index funds from banks.

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