Question: Dividend data: ABF : $0.35 Average growth: 7.35% Single index: 0.618 Average monthly excess return: 1.046295352 constant growth DDM. What is the average growth rate

Dividend data:

ABF : $0.35

Average growth: 7.35%

Single index: 0.618

Average monthly excess return: 1.046295352

constant growth DDM.

What is the average growth rate for ABF:LSE?

Calculate from: (D1-D0)/D0 = (the nearest forecast recent paid dividend)/recent paid dividend.

You finally need the required rate of return k, which can be calculated from the single index model. You can then find the intrinsic value of the stock assuming constant growth DDM

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