Big Rock is listed on the local stock exchange and its stock has had mixed performance over the last few months. The company’s directors are interested in seeing how Big Rock’s performance compares to other companies in the sector. Company Initial Investment $1,000 Value End of Year 1 $1,268 Value End of Year 2 $1,334 Value End of Year 3 $1,105 Calculate the arithmetic mean and the geometric mean over the three-year period
Dividend Valuation
Dividend refers to a reward or cash that a company gives to its shareholders out of the profits. Dividends can be issued in various forms such as cash payment, stocks, or in any other form as per the company norms. It is usually a part of the profit that the company shares with its shareholders.
Dividend Discount Model
Dividend payments are generally paid to investors or shareholders of a company when the company earns profit for the year, thus representing growth. The dividend discount model is an important method used to forecast the price of a company’s stock. It is based on the computation methodology that the present value of all its future dividends is equivalent to the value of the company.
Capital Gains Yield
It may be referred to as the earnings generated on an investment over a particular period of time. It is generally expressed as a percentage and includes some dividends or interest earned by holding a particular security. Cases, where it is higher normally, indicate the higher income and lower risk. It is mostly computed on an annual basis and is different from the total return on investment. In case it becomes too high, indicates that either the stock prices are going down or the company is paying higher dividends.
Stock Valuation
In simple words, stock valuation is a tool to calculate the current price, or value, of a company. It is used to not only calculate the value of the company but help an investor decide if they want to buy, sell or hold a company's stocks.
Big Rock is listed on the local stock exchange and its stock has had mixed performance
over the last few months. The company’s directors are interested in seeing how Big
Rock’s performance compares to other companies in the sector.
Company Initial Investment $1,000
Value End of Year 1 $1,268
Value End of Year 2 $1,334
Value End of Year 3 $1,105
Calculate the arithmetic mean and the geometric mean over the three-year period
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