Security Valuation Word Scramble
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Question | Answer |
nominal risk free rate | (1 + real risk-free rate)(1 + expected inflation) – 1 = real risk-free rate + expected inflation |
Preferred Stock | P = preferred dividend / k |
Infinite Period Model | P0 = D1 / (k - g) |
Earnings Multiplier Model | P0/E1 = D1/E1 / (k - g ) where D1/E1 = expected dividend payout ratio |
Estimating the Value of g | g = (RR)(ROE) where RR = (1 – dividend payout ratio), ROE = return on equity |
Supernormal Growth Model | 1:Forecast the div for each year 2:Use the constant growth model to find the value of the stock one period before the dividend that will grow at a constant rate 3: Find the PV of expected dividends and of the expected future stock price |
Created by:
thongkk
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