stocks dividends
earnings per share = earnings/no. of shares dividends per share = eps if company gives 100% of its earnings dps/eps a) zero growth value of a stock = dividend/share holder discount rate == next period dividend/(rate of return-growth rate) eg: $3/0.15 = $20 b) constant growth dividend yield = next period dividend/price today rate of return = divident yield + capital gain component c) not constant value of a stock = d1/(1+r)1 + d2/(1+r)2.... dt/(1+r)t stocks with no dividends price earnings multiple quiz: 5) 2/1.01 + 2/1.01 + 2/1.01 1.98 + 2.74 + 3.37/1.345 + 25.2 + 2.5 4) rate of return 10% divident 2$ after 3 yrs d1 = 0 d2 = 0 D3=2/0.10 = $20 value = 20/(1.1)3 = 15. 6) rate of return 16% divident 3$ after 2 yrs D1 = 3 * 1.06 = 3.18 D2 = 3 * 1.06*1.06 = 3.37 D3 = ...