Copyright 2010 Pearson Addison-Wesley. All rights reserved.Chapter 7 The Stock Market, the Theory of Rational Expectations, and the Efficient Market HypothesisCopyright 2010 Pearson Addison-Wesley. All rights reserved.7- 27.1 Computing the Price of Common Stock Basic Principle of FinanceValue of Investment = Present Value of Future Cash FlowsCopyright 2010 Pearson Addison-Wesley. All rights reserved.7- 37.1.1 One-Period Valuation ModelCopyright 2010 Pearson Addison-Wesley. All rights reserved.7-