Question

There are three different models used to value stocks based on different dividend patterns. When choosing...

There are three different models used to value stocks based on different dividend patterns.

When choosing the model to use, one must do thorough research concerning the company in question as no single model is entirely perfect. Explain why this statement is correct.

Thank you!

Business   Economics   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Anss..
following are the three different models which are used to value stocks based on different dividend patterns
1. Constant growth Dividend model
2. Zero growth dividend model
3. Super normal dividend growth model.
Constant growth model also known as gordon growth model is the model solves for thepresent value of the infinite series of future dividends.
Zero growth model known as dividend discount model, The price of a stock is the sum of the present value of its future dividend discounted by the market interest rate.
Super normal growth model is based on discounting cash flows, and the purpose of the supernormal growth model is to value a stock which is expected to have higher than normal growth in dividend payments for some period in the future.

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Challenge Exercise 7-2 (Part Level Submission) Safe and Secure, Inc. produces three models of home security...
Challenge Exercise 7-2 (Part Level Submission) Safe and Secure, Inc. produces three models of home security systems. Information on the three products is given below: Assurance Decoder Burglar Beware Sales $443,700 $739,500 $299,300 Variable expenses 221,850 295,800 209,510 Contribution margin 221,850 443,700 89,790 Fixed expenses 182,500 347,300 144,300 Net income $39,350 $96,400 $(54,510 ) Fixed expenses consist of $457,800 of common costs allocated to the three products based on relative sales, and additional fixed costs of $44,300 (Assurance), $119,000 (Decoder),...
Question 17 (1 point) Price discrimination is used when a seller faces different demand curves in...
Question 17 (1 point) Price discrimination is used when a seller faces different demand curves in different markets because: Question 17 options: profits are less than when selling at monopoly prices. no other pricing methods are feasible. profits are greater than selling at a single price. the practice eliminated waste. Question 18 (1 point) Why is it important for firms practicing price discrimination to prevent arbitrage of their product? Question 18 options: Arbitrage is unrelated to firms' profits since the...
1-A division manager who is evaluated based on the division's return on investment will ___________________ any...
1-A division manager who is evaluated based on the division's return on investment will ___________________ any proposal for which the rate of return is ___________________ than the division's current return on investment. a. Accept; lower b. Reject; higher c. Reject; lower d. None of the given options are correct. 2- Processing patients at dental office: Make appointment (office staff can schedule up to 100 appointments during an 8 hour shift) Cleaning by dental hygienist (up to 50 patients per day...
1) • z-value should be expressed to three decimal places: e.g., z=1.645. • Before you start...
1) • z-value should be expressed to three decimal places: e.g., z=1.645. • Before you start each question, you should determine if you are dealing with the population mean or proportion since what you do depends on the type of parameter at hand. • When handling proportion problems, write/use/plug proportions as decimals (e.g., not 54%, but .54). • In the beginning, state clearly if you do a 1-tailed or 2-tailed test. State clearly your H0 and H1 using correct Greek...
Assignment Description Madina Electrical Corporation manufactures electric motors for commercial use. The company produces three models...
Assignment Description Madina Electrical Corporation manufactures electric motors for commercial use. The company produces three models called SM, DM and HDM. The company uses a job costing system with manufacturing overhead applied on the basis of direct labour hours. The system has been in place with little change for 30 years. Product costs and annual sales data are as follows: SM DM HDM Annual sales (units) 42500 1700 20000 Product costs: Raw material $27.50 $47.75 $73.00 Direct labour $20.00 $35.00...
Question 2 The questions in this section are all based on the “Online Book Exchange System...
Question 2 The questions in this section are all based on the “Online Book Exchange System (EyesHaveIt.com)” Case Study on the last page of this document. Read the case study carefully before answering these questions. b) An analyst has identified all the domain classes and their attributes required for the system, as listed below. Use ONLY the classes in this list to draw a Class diagram. The diagram must show all the classes, their attributes, and the relationships between the...
When is a hypothesis considered scientific? a. when it is based on something other than observation...
When is a hypothesis considered scientific? a. when it is based on something other than observation b. when it can be tested and is refutable c. when it relies on anecdotal evidence d. when it relies on mystical explanations e. All hypotheses are considered scientific until experiments determine otherwise. 3. Of the following, which is the earliest step in the scientific process? a. generating a hypothesis b. analyzing data c. conducting an experiment d. drawing a conclusion e. developing a...
1.Fill in the blank: WTP is used to describe an approach to the problem of —————-....
1.Fill in the blank: WTP is used to describe an approach to the problem of —————-. A. value elicitation B. probability elicitation C. heuristic search D. debiasing E. heuristic optimization 2. Under Affect Control Theory, what would the boldface element in the event “An angry manager yells at a lazy worker in the boardroom.” be called? A. An object B. An actor C. A behavior D. A setting E. A transient state 3. Which of the following do Krackhardt and...
1.Fill in the blank: WTP is used to describe an approach to the problem of —————-....
1.Fill in the blank: WTP is used to describe an approach to the problem of —————-. A. value elicitation B. probability elicitation C. heuristic search D. debiasing E. heuristic optimization 2. Under Affect Control Theory, what would the boldface element in the event “An angry manager yells at a lazy worker in the boardroom.” be called? A. An object B. An actor C. A behavior D. A setting E. A transient state 3. Which of the following do Krackhardt and...
1 A local homebrewer is looking to expand his small in-home operations into a company that...
1 A local homebrewer is looking to expand his small in-home operations into a company that will mass produce his beers. He hires you, the analyst, to conduct an analysis on specific types of strategies that his company should take so as to succeed in his mission of providing fresh, locally sourced, handcrafted beers to all (of legal age) in NJ. In this case study, you will provide an analysis of the current market as it stands. You will leverage...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT