4.3 Lecture_08_Solution_2009

# 4.3 Lecture_08_Solution_2009 - + = + + + + +-+ + + = -+ = -...

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1 Solution 1 14th August: Janet Seller Sale after ex-div date 6th August: Grace Buyer Sale before ex-div date 10th August: Grace buyer so long as the sale was before the end of the official working day This is the ex-div date deadline 11 th August: Janet Seller Because she was the owner at the ex-div date deadline

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2 Solution 2: Note: g = 10% when d = 0% (periods 1 to 6) but g = 0% when d = 100% ( 29 ( 29 ( 29 ( 29 ( 29 ( 29 ( 29 ( 29 ( 29 ( 29 ( 29 ( 29 ( 29 2 6 7 0 0 0 0 10% 0 2 6 6 0% 6 1 10% 2 6 6 0% 6 6 6 1 1 1 1 1 ... 1 1 1 1 1 0 0 0 1 ... 1 1 1 1 \$100 1.1 1 1 177.1561 1 0.1 0 1.1 S S S S S S S S S S S S D g D g D g D g P r r g r r r D g r r g r r r r g r  + + + + = + + + +   + - + + +
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Unformatted text preview: + = + + + + +-+ + + = -+ = - \$1,771.561 0.56447393 \$1,000 = = Note simplification by recasting in terms of the unpaid D 1 D 7 is the first paid out dividend, hence g = 10% to get D 7 ; but here growth stops and D 7 is the numerator of a perpetuity calculation (D 7 /r S )...
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## This note was uploaded on 12/23/2009 for the course BCOM FINC 202 taught by Professor Warwickanderson during the Spring '09 term at Canterbury.

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4.3 Lecture_08_Solution_2009 - + = + + + + +-+ + + = -+ = -...

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