According to the gordon growth model

Assignment Help Financial Management

Reference no: EM131969431

According to the Gordon Growth Model, the price of stocks depend on the following except:

A. Return on Treasure bills

B. Required return on investments

C. Expected constant growth rate in dividends

D. The most recent dividend paid

When your required return on an equity investment decreases, the according to the Gordon Growth Model you will be willing to pay ____ (more, less, equal amount) for the investment.

Suppose that a stock is expected to pay a $2 dividend next year, that the dividend is expected to grow at 2% per year, and that your required return on this equity investment is 7%. Using the Gordon growth model, the price you would be willing to pay for the stock is ____ (Round answer to the nearest two decimal points)

Reference no: EM131969431

Questions Cloud

What is the ratio of present value : What is the ratio of the present value of D's share to B's share?

What should this bond sell for in the market : The current discount rate for Canadia government bonds is 7.5%. What should this bond sell for in the market?

What is the target stock price in five years : What is the target stock price in five years? What is the stock price today?

Would our goal of maximizing the value of the stock : Would our goal of maximizing the value of the stock be different if we were thinking about financial management in a foreign country?

According to the gordon growth model : According to the Gordon Growth Model, the price of stocks depend on the following except:

Make chart showing the theoretical and practical dirty : Make a chart showing the theoretical and practical dirty and clean values of the bond

The return on assets equal to the return on equity : When is the return on assets equal to the return on equity?

The price to earnings ratio and price-to-sales ratios : What is the total market value of DPT’s outstanding shares? What are the price to earnings ratio and price-to-sales ratios?

Equity to finance new capital expenditures : KSS corporation uses 20% debt, 10% preferred stock, and 70% equity to finance new capital expenditures.

User Account

All Pages