Question: Dividend data: ABF : $0.35 You can use the nearest dividend as D1 in the constant growth DDM. What is the average growth rate for

Dividend data:

ABF : $0.35

You can use the nearest dividend as D1 in the 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 as described in 1-b Single index model above. You can then find the intrinsic value of the stock assuming constant growth DDM.

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!