Page 44 - FINAL CFA SLIDES DECEMBER 2018 DAY 13
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LOS 47.e: Compare the risk and return Session Unit 14:
characteristics of different types of 47. Overview of Security Markets
equity securities., p.254
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, p.255
Equity capital is used for the purchase of long-term assets, equipment, research and
development, and expansion into new businesses or geographic areas.
tanties
LOS 47.g: Distinguish between the market value and book value of equity securities, p.255
• 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.
