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Assumptions of the gordon growth model

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Reference no: EM133056662

1. Equity - definitions:

a. Define the shares, stocks and quota.

b. Explain why equity is a residual claim?

c. What does limited liability mean and how is it related to shares?

d. What are the assumptions of the Gordon Growth Model?

2. Valuing  equity  -  The  static  case:  Value  the  common  stocks  using  the Gordon Growth Model, if you have the following information:

 

ROE

DIV1

DIV0

g

dp

pb

r

EPS1

EPS0

P

a

20%

 

300

 

 

 

20%

 

400

 

b

25%

200

 

 

 

 

15%

 

0

 

 

 

Reference no: EM133056662

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