Business Administration - Financial Planning RFC225 Chapter Notes - Chapter 16.1: Dividend Discount Model
22 Mar 2017
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1 csc chapter 16 the portfolio management process. Developing and asset mix and selecting investment styles: asset categories: cash, fixed income, equity securities, international investments, derivatives. Lengthen term of bondholding and avoid stocks during contraction phase: 2. Sell long-term bonds, which rally ahead of stocks in response to falling interest rates, during trough phase: 3. Maintain or increase stock position during expansionary phase, since stocks tend to do well during sustained economic growth periods: 4. R rising, g falling during contraction phase (one to two years) which causes prices to fall: 2. R falling faster than g is falling, trough, which causes interest rate driven rally in stock prices: 3. R briefly rises faster than g rises during expansionary phase, cause brief decline in stock prices (six to nine months: 4. G rises faster than r from expansionary to peak phase, cause stock price to rise (one to three years)
