Firms values fit the dividend discount model

Assignment Help Financial Management

Reference no: EM13804452

Extremely high P/E multiples were observed in the market several years ago, especially for technology firms.

a) How can you explain the fact that firms with very low earnings or no earnings are valued in the market as a being with billions of dollars?

b) How do these firms' values fit the dividend discount model?

c) What factors would be likely to influence the market's evaluation of these firms?

Reference no: EM13804452

Questions Cloud

What is the value of brushy mountains stock : Brushy Mountain Mining Company's coal reserves are being depleted, so its sales are falling. Also, environmental costs increase each year, so its costs are rising. As a result, the company's earnings and dividends are declining at the constant rate o..

Market is in equilibrium with the required return equal : A stock is trading at $70 per share. The stock is expected to have a year-end dividend of $3 per share (D1 = $3), and it is expected to grow at some constant rate g throughout time. The stock's required rate of return is 12% (assume the market is in ..

What is your estimate of the stocks current price : A company currently pays a dividend of $3.75 per share (D0 = $3.75). It is estimated that the company's dividend will grow at a rate of 21% per year for the next 2 years, then at a constant rate of 6% thereafter. The company's stock has a beta of 1.4..

Critique the differences between the two corporations : For this assignment you will conduct a comparative DuPont analysis of two companies. Using a search engine, find one large corporation included in the S&P 500. Then, find one of its largest competitors. Go to the investor relations portion of each co..

Firms values fit the dividend discount model : Extremely high P/E multiples were observed in the market several years ago, especially for technology firms. How can you explain the fact that firms with very low earnings or no earnings are valued in the market as a being with billions of dollars? H..

Evaluation of an active portfolio management strategy : How is the Sharpe measure different from the Treynor measures of portfolio performance evaluation? What is the problem with using the Sharpe measure for evaluation of an active portfolio management strategy?

Deviation of returns on the following two asset portfolio : What is the standard deviation of returns on the following two asset portfolio?

Discuss the mutual fund theorem : Discuss the advantages and disadvantages of common stock ownership, relative to other investment alternatives? Discuss the mutual fund theorem? Discuss rate anticipation waps as a bond portfolio management strategy?

What is the role of tourism policy : 1. What is the role of tourism policy? Why is it important? Give 3 examples of different types of tourism policies. 2. Define sustainable tourism? What is the significance of the concept in the 21st century?

User Account

All Pages