Management and Organizational Studies 2310A/B Midterm: MOS 2310 – Chapter 8

• School: Western University
• Department: Management and Organizational Studies
• Course: Management and Organizational Studies 2310A/B
• Professor: Nicholas Kahnert

Document Summary

When you buy a share of stock you receive cash in two ways: the company pays dividends, you sell your shares. Present value of a stock = (d1 + p1) / (1+r) When investment analysts use the dividend valuation model, they usually consider a range of growth scenarios (best case, baseline, worst case) R = dividend yield + capital gains yield: = d1 / p0 + g. Dividend yield: a stock"s cash dividend by its current price: considers d1 / p0. Capital gains yield: the dividend growth rate or the rate at which the value of an investment grows: considers the growth rate g. Price at time t = pt = benchmark p/e ratio x epst. Common stock: equity without priority for dividends or in bankruptcy. Shareholder"s elect directors who hire management to carry out their directives. Directors are elected each year at an annual meeting: general idea is 1 share = 1 vote.