How can stock valuation formulas be used to infer the expected rate of return on a common stock?

-

How can stock valuation formulas be used to infer the expected rate of return on a common stock?



Answer: If dividends are expected to grow forever at a constant rate g, the expected return on the stock is equal to the dividend yield (DIV1/P0) plus the expected rate of dividend growth. The value of the stock according to this CONSTANT-GROWTH DIVIDEND DISCOUNT MODEL is P0 = DIV1 / (r-g).

Comments

Post a Comment

Popular posts from this blog

JAD Advantages and Disadvantages

-
JAD Advantages and Disadvantages : Compared with traditional methods, JAD is more expensive and can be cumbersome if the group is too large relative to the size of the project. Many companies find, however, that JAD allows key users to participate effectively in the requirements modeling process. Read:  What is JAD and how are users involved? What are advantages and disadvantages of JAD? When users participate in the systems development process, they are more likely to feel a sense of ownership in the results, and support for the new system. When properly used, JAD can result in a more accurate statement of system requirements, a better understanding of common goals, and a stronger commitment to the success of the new system. More:  RAPID APPLICATION DEVELOPMENT
Read more

Examine the collapse of Han. What factors explain how this occurred? How influential in Han Dynasty on Chinese History?

-
Examine the collapse of Han. What factors explain how this occurred? How influential in Han Dynasty on Chinese History? Answer: Hsiung Nu (aka Xiongnu) was a threat to the north, Wu had to build the Great Wall to protect empire. Han empire had to give a lot of supplies to Hsiung Nu in order to keep land unharmed. The government allied with wealthy land owners. Peasants had increasing economic pressure, which fueled the Yellow Turban rebellion. Generals stopped recognizing emperor as they became more powerful. Dynasty divided into three kingdoms (Wei, Wu, and Shu). After the Han dynasty, Confucianism became irrelevant, but Daoism and Buddhism were still popular. Han empire invented earthquake devise and anesthesia.
Read more

Summarize effective communication strategies in organizational hierarchies, and review the role and relevance of the organizational grapevine

-
Summarize effective communication strategies in organizational hierarchies, and review the role and relevance of the organizational grapevine Some companies try to encourage communication through workspace design, as well as through Web-based communication channels. some executives also meet directly with employees, such as through management by walking around (MBWA) and town hall meetings, to facilitate communication across the organization. In any organization, employees rely on the grapevine, particularly during times of uncertainty. The grapevine is an unstructured and informal network founded on social relationships rather than organizational charts or job descriptions. Although early research identified several unique features of the grapevine, some of these features may be changing as the Internet plays an increasing role in grapevine communication.
Read more