What is the intrinsic value of stock C in the following statement? - ProProfs Discuss
Menu
SearchAsk a Question+ Ask Question
Advertisement
  1. Business
  2. Management

What is the intrinsic value of stock C in the following statement?

You wish to earn a return of 10% on each of two stocks, C and D. Each of the stocks is expected to pay a dividend of $2 in the upcoming year. Thee expected growth rate of dividends is 9% for stock C and 10% for stock D.

Asked by Kaushalmandalia, Last updated: Jul 12, 2024

+ Answer
Request
Share
Question menu
Vote up Vote down

1 Answer

kaushalmandalia

kaushalmandalia

kaushalmandalia
Kaushalmandalia

Answered Feb 26, 2018

Will be less than the intrinsic value of stock D

PV0 = D1/(k-g); given that dividends are equal, the stock with the higher growth rate will have the higher value.
upvote downvote
Reply 

More Management Questions

Ask Your Own Question

Can You Answer

Advertisement
Advertisement
Search for Google images Google Image Icon
Select a recommended image
Upload from your computer Loader
CancelLoader
Image Preview
Search for Google images Google Image Icon
Select a recommended image
Upload from your computer Loader
CancelLoader
Image Preview
Search for Google images Google Image Icon
Select a recommended image
Upload from your computer Loader
CancelLoader

Email Sent
We have sent an email to your address "" with instructions to reset your password.