标题: dividend discount model [打印本页] 作者: JustasS 时间: 2011-7-11 17:45 标题: dividend discount model
from schweser p. 225 number 16 portfolio management book
BTW, number 17 is similar to my question.
assume that a stock is expected to pay dividends at the end of year 1 and year 2 of 1.25 and 1.56. dividends are expected to grow at a 5% rate thereafter. assuming that ke is 11%, the value of the stock is closest to which of the following?
year 2 dividend should be discounted by 1.1^2 right?作者: Beatnik 时间: 2011-7-11 17:45
Check the search function this question has been answered before - i.e. from the same Schweser reading and same questions作者: draz 时间: 2011-7-11 17:45
remember that the terminal value is a perpituity, so it gives you a pv for period 1, not period 2. thus, once you have that value, you need to discount it by an additional one period (i.e. 1.1 not 1.1^2).
