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book value	Net worth of the firm according to the balance sheet. (See page(s) 168)
common stock	Ownership shares in a publicly held corporation. (See page(s) 165)
constant-growth dividend discount model	Version of the dividend discount model in which dividends grow at a constant rate. (See page(s) 176)
dividend	Periodic cash distribution from the firm to its shareholders. (See page(s) 167)
dividend discount model	Discounted cash flow model of today’s stock price that states that share value equals the present value of all expected future dividends. (See page(s) 172)
efficient market	Market in which prices reflect all available information. (See page(s) 187)
fundamental analysts	Investors who attempt to find mispriced securities by analyzing fundamental information, such as accounting data and business prospects. (See page(s) 186)
initial public offering (IPO)	First offering of stock to the general public. (See page(s) 165)
inside information	Relevant information about a company known by its board of directors, management and/or employees and other insiders but not by the public. (See page(s) 186)
insider trading	Illegal trading of securities, including stocks, bonds, and options, by insiders or those who are tipped by insiders, on the basis of inside information. (See page(s) 187)
insiders	Members of the board of directors, management, employees and others with close relationship to a company, including lawyers, financial advisors, and accountants. (See page(s) 186)
liquidation value	Net proceeds that would be realized by selling the firm’s assets and paying off its creditors. (See page(s) 168)
market-value balance sheet	Financial statement that uses the market value of all assets and liabilities. (See page(s) 170)
payout ratio	Fraction of earnings paid out as dividends. (See page(s) 180)
plowback ratio	Fraction of earnings retained by the firm. Also called retention ratio. (See page(s) 180)
preferred stock	Stock that takes priority over common stock in regards to dividends. (See page(s) 167)
present value of growth opportunities (PVGO)	Net present value of a firm’s future investments. (See page(s) 181)
price-earnings (P/E)	Ratio of stock price to earnings per share.
primary market	Market for the sale of new securities by corporations (See page(s) 165)
random walk	Security prices change randomly, with no predictable trends or patterns. (See page(s) 184)
secondary market	Market in which already issued securities are traded among investors. (See page(s) 165)
semi-strong form efficiency	Market prices rapidly reflect all publicly available information.
strong-form efficiency	Market prices rapidly reflect all information that could in principle be used to determine true value. (See page(s) 188)
sustainable growth rate	Steady rate at which a firm can grow; return on equity times plowback ratio. (See page(s) 181)
technical analysts	Investors who attempt to identify over- or undervalued stocks by searching for patterns in past stock prices. (See page(s) 183)
weak-form efficiency	Market prices rapidly reflect all information contained in the history of past prices. (See page(s) 188)