What should the current price of the stock be?
A stock is expected to pay no dividends for 2 years. At the end of the second year, a
dividend of $ 2.50 will be paid. From that point on, dividends are expected to grow at
4% per year forever. The riskiness of the stock justifies a 20% required rate of return.
What should the current price of the stock be?
Stock best answer:
Answer by Ursugardaddy
That is not a guarantee. Remember that anyway In the past, the market considered non-dividend-paying stocks to be typically growth companies, since expenses from growth initiatives were close to or exceeded their net earnings. This is no longer the rule since a transformation has occurred in today's modern market: firms have decided not to pay dividends under the principle that their reinvestment strategies will, through stock price appreciation, lead to greater returns for the investor. Thus, investors who buy stocks that do not pay dividends prefer to see these companies reinvest their earnings to fund expansion and other projects which they hope will yield greater returns via rising stock price. Although these are generally small- to medium-cap companies, certain large caps have also decided not to pay dividends in the hopes that management can provide greater returns to shareholders through reinvestment.Dividend-paying stocks consist mainly of well-established and mature firms. These companies have grown to a point where they are now leaders in their industries, characterized by having slow but very steady earnings growth. These established companies are mainly concerned with keeping shareholders happy with dividend payments. These companies tend to maintain dividend payments, providing a sense of safety to investors looking to diversify into the equity markets without the high risks of investing in growth companies.
I enjoy investing in companies that pay dividends but to each their own.The dividends make me feel as if I am receiving something for taking a risk.You want companies that increase its dividends every year. Non-dividends companies are taking your money without giving any return on your money. A bank wouldn't give you a mortgage without a down payment..Would they? Think like a bank ok anyway Take Care
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Philippine Stock Exchange
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The Philippine Stock Exchange (Filipino: Pamilihang Sapi ng Pilipinas) (PSE: PSE) is one of the two stock exchanges in the Philippines, the other one being the Philippine Dealing Exchange. It is the primary stock exchange in the Philippines. Aside from being one of the major stock exchanges in Southeast Asia, it is also the first and the longest one operating since 1927. As of 31 December 2007, the Philippine Stock Exchange had 244 listed companies with a combined market capitalization of 3 billion.
It currently maintains two trading floors, one in Makati City's Central Business District and one at its headquarters in Pasig City. It is presently composed of a 15-man board, chaired by former Supreme Court Justice Jose Vitug, an independent director, who was reelected a 4th time on May 18, 2008 (since July 2005). Francis Lim was reelected to a 5th term as president since 2004.
The PSE is known for having one of the shortest trading hours of any stock exchange in Asia, only trading from 9:30 am to 12:30 pm PST. A two-hour long afternoon trading session is set to be added to the PSE trading day by June 30, 2009.
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