Finance security analysis

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Finance 4436 Security Analysis

1. Prove that, is equivalent to the statement,

Hint: Prove first that,

2. In the numerical example, given in Penman (2013) on page 188. , , , and . According to Dr. Fogelberg's formula, , how long is the company expected to maintain the current marginal return on equity before its technology becomes obsolete and the company is only able to earn a marginal return on equity of 10 percent?

3.Go to Yahoo Finance and get the latest numbers for Apple, including the current price and the forward projection of earnings, and compute length of the excess earnings period, before Apple is only able to earn the opportunity cost of equity, which you must assume to be 10 percent?

4. Prove that the residual income model is equivalent to the dividend discount model. Hint: First prove that

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