please find below the solution........ let me know if you need any clarification..
as per DDM price of the stock = expected dividend next year /(required rate - growth rate)
Therefore decline in required rate will lead to the increase in value of the stock.
Ans = Required rate.
a decrease IN what will increase the current value of a stock according to the dividend...
An increase in which of the following will increase the current value of a share according to the dividend growth model? I. dividend amount; II. discount rate; IIII. dividend growth rate
According to the Gordon growth model, what is the value of a stock with a dividend of $1, required return on equity of 10%, and expected growth rate of dividends of 5%? A. $2 B. $10 C. $20 D. $21
Which of the following would cause the price of equity to decrease according to the dividend discount model? a. none of the other choices are correct b. an increase in the discount rate c. an increase in expected future dividends d. an increase in the growth rate of expected future dividends
The dividend growth model tells us that for a stock, if there is an increase in its ___________________, it will result in a dcrease in the current value of the stock. number of future dividends, provided the total number of dividends is less than infinite dividend growth rate both the discount rate and the dividend growth rate dividend amount discount rate As Dell is currently producing its products at its full capacity, it cannot produce and sell more without adding...
1- Stock A has a current price of $25.00, a beta of 1.25, and a dividend yield of 6%. If the Treasury bill yield is 5% and the market portfolio is expected to return 16%, what should Stock A sell for at the end of an investor’s two year investment horizon? (Hint: Solve for the growth rate using the Gordon Growth Model). Question options: $31.00 $31.78 $32.15 ,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,, 2-HMTV has planned on diversifying into the dual-PVR field. As a result,...
Estimating Stock Value Using Dividend Discount Model with Constant Perpetuity Kellogg pays $2.25 in annual per share dividends to its common stockholders, and its recent stock price was $82.50. Assume that Kellogg’s cost of equity capital is 5.0%. a. Estimate Kellogg’s stock price using the dividend discount model with constant perpetuity. $Answer b. Compare the estimate obtained in part a with Kellogg’s $82.50 price. What does the difference between these amounts imply about Kellogg’s future growth? The estimated price is...
the value of the stock rises or declines
so the management should not or should make the investment and
decreased the dividend
The dividend-growth model, De(1+9) k-9 V= suggests that an increase in the dividend growth rate will increase the value of a stock. However, an increase in the growth may require an increase in retained earnings and a reduction in the current dividend. Thus, management may be faced with a dilemma: current dividends versus future growth. As of now,...
which one of the following will increase the price of stock decrease in the require rate return decrease in thw dividend growth rate delay in the payments of dividends decrease in earnings growth
the bond price inorease or decrease from its current market value? Explain why (No caloulations required b wir the price be piice be higher or lower than $1,000? Explain why. (No calculations required) you hokd be your total return in dollars and percentage? the bond for the entire year and the change in yield to maturity ocoure, what would Problem& 20 points) tast is to vailue the stock price of Mare Co. with the Dvidend Growth Model (DGM) in constant...
A stock current pays an annual dividend of $10 per share per year. The dividend is expected to grow 10% annually. Using the dividend growth model and a required rate of return of 14% what is the price of the stock? $100. $275 $22 78.57 $71.43