11. Dividend Discount Models A procedure for valuing the price of a stock by using predicted dividends and discounting them back to present value. The idea is that if the value obtained from the DDM is higher than what the shares are currently trading at, then the stock is undervalued. V 0 = Value of Stock D t = Dividend k = required return
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15. Multi-Period Dividend-Discount Model P N = expected sales price of stock at time N N = number of years the stock is to be held