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Exhibit 14.1
Use the Information Below for the Following Problem(S)
(1) The firm's expected rate of growth of earning per share
(2) The amount of capital invested in growth investments
(3) The rate of return earned on the funds relative to the required rate of return
(4) The required rate of return on the security based on its systematic risk
(5) The firm's dividend payout ratio
(6) The time horizon when these growth investments will be available
-Refer to Exhibit 14.1.In the listing above,which three factors influence the earnings multiple for a stock?
Moral Hazard
The risk that one party to a contract can change their behavior to the detriment of another after the contract has been concluded, particularly where one party bears the cost of those actions.
Uncertainty
A state of having limited knowledge where it is impossible to exactly describe existing states or future outcomes.
Incentive Compensation
A form of payment designed to motivate and reward employees for exceeding specific performance goals.
Compensation
Payment or benefits provided to employees in exchange for their labor or services, including salaries, wages, and benefits packages.
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