ch 09 - Stocks and Their Valuation Chapter 9 Features of...

Info iconThis preview shows pages 1–10. Sign up to view the full content.

View Full Document Right Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: Stocks and Their Valuation Chapter 9 Features of Common Stock Determining Common Stock Values Preferred Stock 9-1 Facts about Common Stock Represents ownership Ownership implies control Stockholders elect directors Directors elect management Managements goal: Maximize the stock price 9-2 Intrinsic Value and Stock Price Outside investors, corporate insiders, and analysts use a variety of approaches to 9-3 Determinants of Intrinsic Value and Stock Prices 9-4 True Risk Perceived Investor Returns Perceived Risk Managerial Actions, the Economic Environment, Taxes, and the Political Climate Stocks Intrinsic Value Stocks Market Price Market Equilibrium: Intrinsic Value = Stock Price Different Approaches for Estimating the Intrinsic Value of a Common Stock Discounted dividend model Corporate valuation model Using the multiples of comparable firms 9-5 Discounted Dividend Model Value of a stock is the present value of the future dividends expected to be generated by the stock. + + + + + + + + = ) r (1 D ... ) r (1 D ) r (1 D ) r (1 D P s 3 s 3 2 s 2 1 s 1 9-6 Constant Growth Stock g r D g r g) (1 D P s 1 s- =- + = 9-7 A stock whose dividends are expected to grow forever at a constant rate, g. Future Dividends and Their Present Values 9-8 t t t ) r 1 ( D PVD + = t PVD P = $ 0.25 Years (t) t t ) g 1 ( D D + = What happens if g > r s ?...
View Full Document

Page1 / 30

ch 09 - Stocks and Their Valuation Chapter 9 Features of...

This preview shows document pages 1 - 10. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online