Page 41 - FINAL CFA I SLIDES JUNE 2019 DAY 12
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Session Unit 14:
47. Overview of Security Markets
LOS 47.e: Compare the risk and return characteristics of different types of
equity securities.
The returns on equity investments consist of price changes, dividend payments, and, in
the case of equities denominated in a foreign currency, gains or losses from changes in
exchange rates.
LOS 47.f: Explain the role of equity securities in the financing of a company’s assets.
tanties
Equity capital is used for the purchase of long-term assets, equipment, research and
development, and expansion into new businesses or geographic areas.
LOS 47.g: Distinguish between the market value and book value of equity securities.
.
The book value of equity is the value of the firm’s assets on the balance sheet minus its
liabilities.
The market value of equity is the total value of a firm’s outstanding equity shares based on
market prices and reflects the expectations of investors about the firm’s future
performance.
