1. Financial Institutions and Markets FIN 304 Dr. Andrew L. H. Parkes Day 8 “How do financial markets work?” 卜安吉

2. Oct. 10, 2009Financial Institutions & Markets, Day 82 Chapter 10 part 2: Stocks How do we think of stocks?  $$$$$$$$$$  VERY RISKY!!  Ownership of a company  Mysterious and Volatile A Volatile Market!

3. Oct. 10, 2009Financial Institutions & Markets, Day 83 3 Ways to Value Stocks! #2. Earnings method #2. Earnings method –Find the industry P/E –What is the latest Earnings per share for the company –Calculate the Expected Price P/E

4. Oct. 10, 2009Financial Institutions & Markets, Day 84 3 Ways to Value Stocks! #2. Earnings method #2. Earnings method The price earnings ratio (PE) is a widely watched measure of much the market is willing to pay for $1.00 of earnings from the firms. P/E