FIN 3104 Lecture Notes - Lecture 12: Strategic Planning, Net Present Value, Cash Flow

• School: Virginia Tech
• Department: Finance, Insurance, Business Law
• Course: FIN 3104
• Professor: Keown

Document Summary

E. at (cid:373)atu(cid:396)it(cid:455), the (cid:271)o(cid:374)d"s p(cid:396)i(cid:272)e e(cid:395)uals the pa(cid:396) value. F. the cal(cid:272)ulated ytm is(cid:374)"t (cid:374)e(cid:272)essa(cid:396)il(cid:455) the e(cid:454)pe(cid:272)ted ytm: 1. Ytm only makes sense when the bond performs according to the terms in the bond contract or indenture: 2. But there is default risk associated with corporate bonds: 3. What we have calculated with the ytm is really the promised. The calculated or promised ytm can be an optimistic estimate of the actual ytm the bondholder will earn. G. what should you be investing in if you expect interest rates to increase: short maturities, high coupon bonds. V. valuation of common stock: vcs = d1 / k g, what is the value of a share of stock that just paid a dividend of. , if the expected growth rate on dividends is 10% and the required rate of return is 20% D1 = d0 (1 + g); d0 = .