(BQ) Part 2 book "Fundamentals of financial management" has contents: Stocks and their valuation, the cost of capital, capital structure and leverage, working capital management, multinational financial management, distributions to shareholders dividends and share repurchases,.and other contents. | CHAPTER 9 S t o c k s a nd T he i r Va l ua t io n SOURCE: Accessed January 11, 2000. © 2000 America Online, Inc. 406 A O L TA K E S I N V E S TO R S O N A N EXCITING ROLLER COASTER RIDE $ AMERICA ONLINE A $10,000 investment in America Online (AOL) During this upswing some observers were concerned when it went public in 1992 would have grown that many investors did not realize just how risky the to $10 million by November 1999! However, stock market is. There is no guarantee that the market will AOL’s stock price has steadily declined throughout 2000 continue to rise, and even in bull markets some stocks and early 2001. These ups and downs suggest that AOL’s crash and burn. Indeed, after nearing the 12,000 mark in road to riches has been anything but smooth—its early 2000, the Dow declined later in the year to below shareholders have had an exciting and often nerve- 10,000 in the wake of concerns about corporate earnings, wracking roller coaster ride. At the beginning of 2001, rising oil prices, and a weakening European currency. The AOL’s investors are unsure whether the stock’s long-run drop in the once high-flying Nasdaq has been even more trend will be up or down but, if history is any guide, the dramatic. After topping 5,000 in March 2000, the Nasdaq movement will be swift, uneven, and large. Composite Index fell more than 50 percent in the By virtually any measure, the stock market performed following year. By April 2001, the index stood around extraordinarily well up through 1999. From slightly less 1,700. While some analysts believe that these events than 4,000 in early 1995, the Dow surged past 11,000 suggest that the long bull market has finally run its in 1999. To put this remarkable 7,000-point rise in course, others believe that these declines are only bumps perspective, consider that the Dow first reached 1,000 in the road and that the long-run trend is still positive. in 1965, then .
