CH9 stock

# CH9 stock - Valuation of Financial Assets Equity(Stock...

This preview shows pages 1–7. Sign up to view the full content.

Valuation of Financial Assets - Equity (Stock) Common stock Preferred stock hybrid similar to bonds with fixed dividend amounts similar to common stock as dividends are not required and have no fixed maturity date Always perpetual preferred, so use perpetuity formula 1

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

View Full Document
Stock Valuation Models Terms: Expected Dividends D0 – most recent dividend paid; last dividend paid; paid at t = 0 D1 – dividend paid at t = 1 Dn – dividend paid at t = n We suggest that we never sell a stock, so all the cash flows are ALL future dividends, to infinity 2
Stock Valuation Models Terms: Market Price 3 Pn = the price at which a stock sells in the market at t = n ay market tod in the sells stock a at which price the P 0 =

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

View Full Document
Stock Valuation Models Terms: Intrinsic Value (Price we calculate) 4 both or value, book its price, market current s asset' the from different be may and facts the by justified is investor, an of mind the in that, asset an of value the P ˆ 0 =
Stock Valuation Models Terms: Growth Rate 5 Can be + or - g = the expected rate of change in dividends per share

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

View Full Document
Stock Valuation Models Terms: Required Rate of Return 6 k = i = r s investment other on available returns and riskiness its given , acceptable consider rs stockholde that stock common a on return of rate minimum the k s =
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

### What students are saying

• As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

Kiran Temple University Fox School of Business ‘17, Course Hero Intern

• I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

Dana University of Pennsylvania ‘17, Course Hero Intern

• The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

Jill Tulane University ‘16, Course Hero Intern