44、An analyst gathered the following information about a company: Current earnings per share (E0) reported | $5.00 | Current dividend per share (D0) paid on the company's common stock | $3.00 | Required rate of return on the company's common stock | 15.0% | Expected constant growth rate in earnings and dividends | 7.0% |
The value of a share of the company's stock and the leading price/earnings (P/E) ratio, respectively, are closest to: | Value of stock | Leading P/E ratio | A. | $37.50 | 7.5 | B. | $37.50 | 8.0 | C. | $40.13 | 7.5 | D. | $40.13 | 8.0 |
A. Answer A B. Answer B C. Answer C D. Answer D
Correct answer = C
"Introduction to Security Valuation: Part II," Frank K. Reilly and Keith C. Brown
2008 Modular Level I, Vol. 5, pp. 186-188
Study Session 14-60-c
show how to use the DDM to develop an earnings multiplier model and explain the factors in the DDM that affect a stock's price-to-earnings (P/E) ratio
The constant growth dividend model and the earnings multiplier model will result in the same value for a share of stock. Using the constant growth model, the value is ($3.00)(1.07) or $3.21 divided by the required rate of return minus the growth rate: $3.21 / 0.08 = $40.125. The earnings multiplier is the dividend payout ratio divided by the required rate of return minus the growth rate: 0.6 / 0.08 = 7.5. Next year's expected earnings are $5.00(1.07) = $5.35. $3.21 / 5.35 = 0.6. | 
发表于 2008-5-27 15:07
| 
