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EXHIBIT 8-1 COUNTRY AND REGIONAL CONTRIBUTIONS TO GLOBAL GDP AND EQUITY MARKET CAPITALIZATION (2007)
Source: MacroMavens, IMF World Economic Outlook 2008, Standard & Poors BMI Global Index weights.
EXHIBIT 8-2 EQUITY MARKETS RANKED BY TOTAL MARKET CAPITALIZATION AT THE END OF 2008 (BILLIONS OF U.S. DOLLARS)
Rank 1 2 3 4 5 6 7 8 9 10 Name of Market NYSE Euronext (U.S.) Tokyo Stock Exchange Group NASDAQ OMX NYSE Euronext (Europe) London Stock Exchange Shanghai Stock Exchange Hong Kong Exchanges Deutsche Brse TSX Group BME Spanish Exchanges Total U.S. Dollar Market Total U.S. Dollar Number of Listed Capitalization Trading Volume Companies $9,208.9 $3,115.8 $2,396.3 $2,101.7 $1,868.2 $1,425.4 $1,328.8 $1,110.6 $1,033.4 $948.4 $33,638.9 $5,607.3 $36,446.5 $4,411.2 $6,271.5 $2,600.2 $1,629.8 $4,678.8 $1,716.2 $2,410.7 3,011 2,390 2,952 1,002 3,096 864 1,261 832 3,841 3,576
Source: Adapted from the World Federation of Exchanges 2008 Report (see http://www.world-exchanges.org).
EXHIBIT 8-3 REAL RETURNS ON GLOBAL EQUITY SECURITIES, BONDS, AND BILLS DURING 1900-2008
Source: Adapted from the 2008 Australian Share Ownership Study conducted by the Australian Securities Exchange (see http://www.asx.com.au). For Australia and the United States, the data pertain to direct and indirect ownership in equity markets; for other countries, the data pertain to direct ownership in shares and share funds. Data not available in specific years are shown as N/A.
COMMON SHAREHOLDERS
VOTING RIGHTS
Statutory voting
Vote by proxy
Voting rights
Cumulative voting
Share classes
EMBEDDED OPTIONS
Cumulative
Noncumulative
Participating
Nonparticipating
POSSIBLE ADVANTAGES OF CONVERTIBLE PREFERENCE SHARES Earn a higher dividend Opportunity to share in profits Benefit from a rise in the price of the common shares Price is less volatile than the common share price
Public
Direct investment
Global depository receipts (GDR) American depository receipts (ADR) Global registered share (GRS) Basket of listed depository receipts (BLDR)
Yes, through private placements to QIBs None Private offerings, resales, and trading through automated linkages such as PORTAL Low None
Low None
High Yes
High Yes
EXHIBIT 8-17 IMPACT OF REINVESTED DIVIDENDS ON CUMULATIVE REAL RETURNS IN THE U.S. EQUITY MARKET: 19002008
Historical data
Average rate of return Standard deviation
Fixed dividend
Raise capital
Finance revenuegenerating activities Ensure going concern status
Increase liquidity
Mergers and acquisitions Stock-based compensation
NIt ROE t BVE t BVE t 1 / 2 ROE 2007 ROE 2008 $8,144,000 11.9% ($65,010,000 $71,358,000) / 2 $8,104,000 13.2% ($57,556,000 $65,010,000) / 2
Market value of equity = Market price per share Shares outstanding Market value of equity = US$16.97 6,750,000 = US$114,547,500
Book value of equity per share = Total shareholders equity/Shares outstanding Book value of equity per share = US$57,556,000/6,750,000 = US$8.53 Price-to-book ratio = Market price per share/Book value of equity per share Price-to-book ratio = US$16.97/US$8.53 = 1.99
Cost of equity
Estimate with pricing models: dividend discount model (DDM), capital asset pricing model (CAPM), etc.
SUMMARY
Types of equity securities Importance and relative performance of equity securities Ownership characteristics and voting rights Investing in nondomestic equities Risk and return characteristics Market value and book value Cost of equity, (accounting) return on equity, and investors required return