Monday, August 4, 2008

Fin251

Continuation from valuating shares. Expected return is dividend plus resulting capital gain. Recursive Valuatuon Formula. Discount the future share price by your return. Investment horizon: length of time a sum of money is to be invested. Apparently, all investors will reach the same valuation no matter what this investment horizon is.

Instead of discountign future dividends to reach the final selling price, use some assumptions: Zero growth where EPS = Dividends per share; Constant growth where dividends grow in a compounded; Non - constant growth where a piecewise dividend rate is used.

Composed and transmitted from my iPod touch

No comments: