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If two firms have the same current dividend and the same expected growth rate should their stocks sell at the same current price to maintain market equilibrium?
the same question asked Brigham and Gapenski about 10 years ago in their book about financial management. well, the answer is "no". the third ingredient missing in Gordon's formula about a stock price is the degree of sistematic risk associated with each stock. this risk is reflected in the required rate of return calculated after the CAPM formula.
What else can I help you with?
What happens if the current price is below the equilibrium?
He or She will be arrested.
Types of equilibrium?
In physics there are two common types of equilibrium: static equilibrium and neutral equilibrium. Equilibrium usually is related to potential energy, for a system to be at equilibrium it must maintain the balance between the two types of mechanical energy: potential and kinetic. The first equilibrium: static means that the system is in a relatively low (relatively means that there could be lower energy but the current states is a local minimum), thus small disturbances to the system will be returned to its original equilibrium. The other type of equilibrium is neutral equilibrium, the relative energies of the system is constant, thus disturbances to the system will move the system but it will remain at the same equilibrium value, and the system makes no effort to return to its original state. Please take a look at the graph for a visualization of these 2 types.
How can one determine the expected rate of return for an investment?
To determine the expected rate of return for an investment, one can calculate the average annual return based on historical data, analyze the current market conditions and economic outlook, consider the risk associated with the investment, and use financial models such as the Capital Asset Pricing Model (CAPM) or the Dividend Discount Model (DDM).
The shawnee company paid a dividend of 0.42 per share last year if the current selling price of the stock is 27.38 what is the current yield on the stock?
1.5%
How is future related to current demand?
if the price is expected to rise,current demand will rise.
What is the expected dividend if the you pay 1.00 an the dividend earns 4 percent for 3 years.?
Data: current dividend= 1 Growth = 4% time period= 3 years solution dividend for first year= 1*(1+0.04) Expected Dividend for first year= 1.04 dividend for second year= 1.04(1+0.04) Expected dividend for the second year =1.082 dividend for third year= 1.082(1+0.04) Expected Dividend for Third Year = 1.124
How to find the expected dividend yield?
To find the expected dividend yield, divide the expected annual dividends per share by the current market price per share. The formula is: Expected Dividend Yield = (Expected Annual Dividends / Current Market Price) × 100. This yield provides an indication of the income generated from an investment in relation to its price, helping investors assess the attractiveness of a stock. Additionally, keep in mind that expected dividends can be based on historical trends or company announcements.
How can you calculate internal rate of return on investment in real estat?
common stock current price $90 is expected to pay a dividend of $10. Company growth rate is 11%. estimate the expected rate of return on corp stock common stock current price $90 is expected to pay a dividend of $10. Company growth rate is 11%. estimate the expected rate of return on corp stock
A stock is expected to pay a dividend of 1 at the end of the year The required rate of return is rs 11 percent and the expected constant growth rate is 5 percent?
A stock is expected to pay a dividend of $1 at the end of the year. The required rate of return is rs 11%, and the expected constant growth rate is 5%. What is the current stock price?
An ordinary share has a current price of 82.50 and is expected to grow at a constant rate of 10 percent If you require a 14 percent rate of return what is the current dividend on this share?
4%
A stock is expected to pay a dividend of 0.75 at the end of the year The required rate of return is rs equals 10.5 percent and the expected constant growth rate is g equals 6.4 percent?
A stock is expected to pay a dividend of $0.75 at the end of the year. The required rate of return is rs = 10.5%, and the expected constant growth rate is g = 6.4%. What is the stock's current price?
What is the current dividend on this stock on share of Commons stock has a current price of 82.50 and is expected to grow at a constant rate of 10 percent If you require a 14 percent rate of return?
$3.00
What is Dividend Yield?
The dividend yield is the ratio of the annual dividend amount to the current price of the stock. So if the dividend is $1 and the current price is $50, the yield is 2 percent ($1/$50). But when the stock changes price the current dividend changes accordingly.
Thomas brothers is expected to pay a 0.50 per share dividend at the end of the year the dividend is expected to grow at a constant rate of 7 percent a year the required rate of return on the stock?
The rate of return on the stock is dependent on the public's appraisal of the current economic situation and of the company. However, on the long term it is dependent on the management's efforts.
How do you compute dividend yield?
Dividend Yield = Annual Dividend (usually previous 12 months)/Current or Purchase Price.
Cost of equity using the dividend growth model?
The cost of equity using the dividend growth model (DGM) is calculated using the formula: ( r = \frac{D_1}{P_0} + g ), where ( r ) is the cost of equity, ( D_1 ) is the expected dividend next year, ( P_0 ) is the current stock price, and ( g ) is the growth rate of dividends. This model assumes that dividends will grow at a constant rate indefinitely. It is commonly used by investors to assess the expected return on equity investments based on future dividend payments.
Is unclaimed dividend a current liability?
true its a current laibilitity
