COM 240 Chapter Notes - Chapter 8: Stock Valuation, Preferred Stock, Dividend Yield

• School: University of Victoria
• Department: Commerce
• Course: COM 240
• Professor: Majerbi Basma

Document Summary

The right to share proportionally in dividends paid. The right to share proportionally in assets remaining after liabilities have been paid in a liquidation. Pt = dt/(r - g: to solve for the required return (r): r = dt/pt + g r = dividend yield + capital gains yield. Dividends yield: a stock"s cash dividend by its current price. Capital gains yield: the dividend growth rate, or the rate at which the value of an investment grows: non-constant growth allows for supernormal growth rates over some nite length of time. Determine what the stock will be worth once dividends are paid, & then discount that future price back to get today"s present value.