Calculation of the implied growth duration of various compan

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Reference no: EM1315698

Calculation of the implied growth duration of various companies and decision making.

You are given the following information about two computer software firms and the S&P Industrials:

	Company A	Company B	S P industrials
P/E ratios	30	27	18
Expected growth	0.18	0.15	0.07
Dividend yield	0	0.01	0.02

a). Compute the growth duration of each company stock relative to the S&P Industrials.

b). Compute the growth duration of Company A relative to Company B.

c). Given these growth durations, what determines your investment decision?

Reference no: EM1315698

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