Write Down the Equation for the Stock Price

question 18

Essay

Write down the equation for the stock price.Use this equation to answer the following:
a.Your stock broker calls to tell you she has a great deal on a stock.She gives you the following information: the real interest rate is 4 percent;the capital gain on this stock is 3.5 percent;and it pays $2.50 in dividends.How much should you pay for this stock?
b.The next day she calls back and tells you about another stock that is for sale (i.e. ,that is the market price)for $75.She doesn't know the dividend growth but she does know the dividend payment,$0.35 per share,and the real interest rate,4 percent.For you to buy this stock,how much annual dividend growth should you expect at that price?
c.A hot stock tip comes from a friend.The price of the stock is $50,the dividend gain is 2.5 percent,and you know the real interest rate from your previous two discussions with your broker.How much of a dividend payment will you want?

---

Definitions:

Organizational Flexibility

The ability of an organization to adapt rapidly and efficiently to changes in the internal and external environment.

HR Forecasting

The process of predicting an organization's future human resources needs based on current data, trends, and projected future events to ensure that the right number of people with the right skills are available when needed.

HR Strategies

Long-term plans designed to align human resource management with the overall goals of an organization to achieve competitive advantage.

KSAOs

The knowledge, skills, abilities, and other characteristics that are necessary for a person to perform well in a job. Also referred to as job specifications, KSAOs are derived from job analysis.