Equity valuation - Share Valuation
10 important questions on Equity valuation - Share Valuation
What are the 3 dificulties of Share Valuation?
2. Life of investment is uncertain because an equity can theoretically last forever.
3. Difficult to measure the expected return the market expects.
How do you calculate the Present Value of Equity?
What are the 3 Scenarios of Share Valuation?
2. Constant Growth
3. Differential Growth
- Higher grades + faster learning
- Never study anything twice
- 100% sure, 100% understanding
For a Zero-Growth shar of equity =, this implies that:
What happens when divident given is always a steady rate?
The dividend for a given company always grows at a steady rate, g.
If we let D0 be the dividend just paid, then the next dividend, D1, is:
D1 = D0 x (1 + g)
When you have dividends in two periods, you calculate this through:
What is a Growing perpetuity?
Explain how non-constant growth works:
What are the share valuation components of the required return?
What does Capital Gains Yield mean?
The dividend growth rate, or the rate at which the value of an investment grows
The question on the page originate from the summary of the following study material:
- A unique study and practice tool
- Never study anything twice again
- Get the grades you hope for
- 100% sure, 100% understanding