rb@ccivax.UUCP (rex ballard) (03/22/86)
In article <5931@allegra.UUCP> dsf@allegra.UUCP (David Fox) writes: >>>Someone mentioned that the stock market is just a present value machine >>>This can't be totally true... >>Wrong. The price of a share of stock is the net present value of the >>company divided by the number of shares outstanding... > >If this were the case stock prices could not jump on good rumors nor >plummet on bad rumors. Actually, the price of a share of stock is >always whatever price one person is willing to buy at and and another is >willing to sell at. Is there any reason why, for whatever reason, I couldn't buy say, 100 shares of stock that is normally selling for around $10/share for about $15/share and effect the daily "high". Or sell it for $7 to effect the daily low? Some companies' employee stock purchase (ESP) plans take the high and low on a particular day, split the difference and discount that price by say 5-15%. If the company did as described above, for a couple of days, they could raise the "high" enough to reduce the number of stocks actually issued by the company. Later, the price would drop to "normal" or slightly below because of dissappointed speculators. Effectively, the company could insure that the value was at it's highest when the ESP was made. The employee could effectively loose a hefy percentage of his discount couldn't he? Is this done? Is it legal? Are ESP's good investments?