After studying this chapter you should be able to

• Understand the stock trading reports in the financial pages of newspapers.
• Calculate the present value of a stock given forecasts of future dividends and future stock price.
• Use stock valuation formulas to infer the expected rate of return on a common stock.
• Interpret price-earnings ratios.
• Understand what professionals mean when they say that there are no free lunches on Wall Street or Bay Street.