宏观经济习题Chap009.pptVIP

Stock Valuation Key Concepts and Skills Understand how stock prices depend on future dividends and dividend growth Be able to compute stock prices using the dividend growth model Understand how growth opportunities affect stock values Understand the PE ratio Understand how stock markets work Chapter Outline 9.1 The Present Value of Common Stocks 9.2 Estimates of Parameters in the Dividend Discount Model 9.3 Growth Opportunities 9.4 Price-Earnings Ratio 9.5 The Stock Markets 9.1 The PV of Common Stocks The value of any asset is the present value of its expected future cash flows. Stock ownership produces cash flows from: Dividends Capital Gains Valuation of Different Types of Stocks Zero Growth Constant Growth Differential Growth Case 1: Zero Growth Assume that dividends will remain at the same level forever Case 2: Constant Growth Constant Growth Example Suppose Big D, Inc., just paid a dividend of $.50. It is expected to increase its dividend by 2% per year. If the market requires a return of 15% on assets of this risk level, how much should the stock be selling for? P0 = .50(1+.02) / (.15 - .02) = $3.92 Case 3: Differential Growth Assume that dividends will grow at different rates in the foreseeable future and then will grow at a constant rate thereafter. To value a Differential Growth Stock, we need to: Estimate future dividends in the foreseeable future. Estimate the future stock price when the stock becomes a Constant Growth Stock (case 2). Compute the total present value of the estimated future dividends and future stock price at the appropriate discount rate. Case 3: Differential Growth Case 3: Differential Growth Case 3: Differential Growth Case 3: Differential Growth A Differential Growth Example A common stock just paid a dividend of $2. The dividend is expected to grow at 8% for 3 years, then it will grow at 4% in perpetuity. What is the stock worth? The discount rate is 12%. With the Formula With Cash Flows 9.2 Estimates of Parameters The value