Stock valuation33

Chapter 8 - Stock Valuation  2005, Pearson Prentice Hall

Security Valuation ,[object Object]

Preferred Stock ,[object Object],[object Object]

Preferred Stock ,[object Object],[object Object],[object Object]

Preferred Stock ,[object Object],[object Object],[object Object],[object Object]

Preferred Stock ,[object Object],[object Object],[object Object],[object Object],[object Object]

[object Object],[object Object],[object Object],[object Object],Preferred Stock

[object Object],[object Object],[object Object],Preferred Stock Features

[object Object],[object Object],[object Object],[object Object],Preferred Stock Features

[object Object],[object Object],Preferred Stock Features

Preferred Stock Valuation ,[object Object]

Preferred Stock Valuation ,[object Object],V = D k ps ps

Example: ,[object Object],[object Object]

Example: ,[object Object],[object Object],V ps = 4.125 .095 =

Example: ,[object Object],[object Object],V ps = 4.125 .095 = $43.42

Expected Rate of Return on Preferred ,[object Object]

Expected Rate of Return on Preferred ,[object Object],D P o k ps =

Example ,[object Object],D P o k ps = = = 4.125 40

Example ,[object Object],D P o k ps = = = .1031 4.125 40

The Financial Pages: Preferred Stocks ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Common Stock ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Common Stock Characteristics ,[object Object],[object Object],[object Object],[object Object]

[object Object],[object Object],Common Stock Valuation (Single Holding Period)

[object Object],[object Object],Common Stock Valuation (Single Holding Period) 0 1 ? 5.50 + 120

Common Stock Valuation (Single Holding Period) ,[object Object],[object Object],[object Object],[object Object]

Common Stock Valuation (Single Holding Period) ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

The Financial Pages: Common Stocks ,[object Object],[object Object],[object Object],[object Object]

Common Stock Valuation (Multiple Holding Periods) ,[object Object],[object Object]

Common Stock Valuation (Multiple Holding Periods) ,[object Object],[object Object],V cs = D 1 k cs - g

[object Object],[object Object]

[object Object],[object Object],V cs = D 1 k cs - g

[object Object],[object Object],[object Object],[object Object],[object Object],V cs = D 1 k cs - g

Example ,[object Object],D 0 = $5, so D 1 = 5 (1.10) = $5.50

Example ,[object Object],V cs =

Example ,[object Object],V cs = = D 1 k cs - g

Example ,[object Object],V cs = = = D 1 5.50 k cs - g .15 - .10

Example ,[object Object],V cs = = = $110 D 1 5.50 k cs - g .15 - .10

Expected Return on Common Stock ,[object Object]

Expected Return on Common Stock ,[object Object],V cs = D k cs - g

Expected Return on Common Stock ,[object Object],V cs = D k cs - g k = ( ) + g D 1 V cs

Expected Return on Common Stock ,[object Object],V cs = D k cs - g k = ( ) + g D 1 P o

Example ,[object Object],k cs = ( ) + g D 1 P o

Example ,[object Object],k cs = ( ) + g D 1 P o k cs = ( ) + .05 = 3.00 27

Example ,[object Object],k cs = ( ) + g D 1 P o k cs = ( ) + .05 = 16.11% 3.00 27

Stock valuation33

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