Calculation of the implied growth duration of various

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Calculation of the implied growth duration of various companies and decision making.

You are given the following information about two computer software firms and the S&P Industrials:

 

Company A

Company B

S P industrials

P/E ratios

30

27

18

Expected growth

0.18

0.15

0.07

Dividend yield

0

0.01

0.02

a). Compute the growth duration of each company stock relative to the S&P Industrials.

b). Compute the growth duration of Company A relative to Company B.

c). Given these growth durations, what determines your investment decision?

Reference no: EM13356794

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