Hostname: page-component-cc8bf7c57-xrnlw Total loading time: 0 Render date: 2024-12-11T23:02:42.501Z Has data issue: false hasContentIssue false
  • English
  • Français

Normative Stock Price Models

Published online by Cambridge University Press:  19 October 2009

Harold Bierman Jr.  and
Jerome Hass
Get access Rights & Permissions [Opens in a new window]

Extract

All the stock price models discussed in this paper are based on the assumption that the present value of a share of common stock is equal to the discounted value of all future expected dividends accruing to the stockholder:

where Po : current value of a share of common stock,

Dt: dividend expected to be received at end of period t,

k : investor's discount or time-value rate, and

t : time.

Type
Research Article
Information
Journal of Financial and Quantitative Analysis , Volume 6 , Issue 4 , September 1971 , pp. 1135 - 1144
Copyright
Copyright © School of Business Administration, University of Washington 1971

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

[1]Bauman, W. Scott. “Estimating the Present Value of Common Stocks by the Variable Rate Method.” Ann Arbor, Michigan: Bureau of Business Research, University of Michigan, 1963.Google Scholar
[2]Bauman, W. Scott. “Investment Returns and Present Value.” Financial Analysts Journal, XXV, November–December 1969, pp. 107–120.CrossRefGoogle Scholar
[3]Brigham, Eugene F., and Pappas, James L.. “Duration of Growth, Change in Growth Rates, and Corporate Share Prices” Financial Analysts Journal, XXIII, May–June 1966, pp. 157–162.Google Scholar
[4]Clendenin, John C., and Van Cleave, Maurice. “Growth and Common Stock Values.” Journal of Finance, IX, December 1954, pp. 365–376.Google Scholar
[5]Durand, David. “Growth Stocks and the St. Petersburg Paradox.” Journal of Finance, XII, September 1957, pp. 348–363.Google Scholar
[6]Eiteman, David. “A Computer Program for Common Stock Valuation.” Financial Analysts Journal, July–August 1968, pp. 107–111.CrossRefGoogle Scholar
[7]Gordon, Myron J.The Investment, Financing, and Valuation of the Corporation. Homewood, Illinois: Irwin, 1962.Google Scholar
[8]Holt, Charles C. “The Influence of Growth Duration on Share Prices.” Journal of Finance, XVII, September 1963, pp. 465–475.Google Scholar
[9]Lerner, Eugene M.Readings in Financial Analysis and Investment Management. Homewood, Illinois: Irwin, 1963.Google Scholar
[10]Makeham, W. M. “On the Theory of Annuitites Certain.” Journal of Institute of Actuaries, and Assurance Magazine, XIV, 1869, pp. 189–199.Google Scholar
[11]Malkiel, Burton G. “Equity Yields, Growth, and the Structure of Share Prices.” American Economic Review, LII, December 1963, pp. 1004–1031.Google Scholar
[12]Mao, James C. T. “The Valuation of Growth Stocks: The Investment Opportunities Approach.” Journal of Finance, XXI, March 1966, pp. 95–102.CrossRefGoogle Scholar
[13]Miller, Merton H., and Modigliani, Franco. “Dividend Policy, Growth, and the Valuation of Shares.” Journal of Business, XXXIV, October 1961, pp. 411–434.Google Scholar
[14]Molodovsky, Nicholas. “Valuation of Common Stocks.” The Analysts Journal, XV, February 1959, pp. 23–27, 84–99.Google Scholar
[15]Molodovsky, Nicholas; May, Catherine; and Chottiner, Sherman. “Common Stock Valuation.” Financial Analysts Journal, XXI, March–April 1965, pp. 104–123.CrossRefGoogle Scholar
[16]Robichek, A. A., and Myers, S. C.. “Conceptual Problems in the Use of Risk-Adjusted Discount Rates.” The Journal of Finance, December 1966, pp. 727–730.Google Scholar
[17]Soldofsky, Robert M. “The History of Bond Tables and Stock Valuation Models.” Journal of Finance, XXI, March 1966, pp. 103–111.CrossRefGoogle Scholar
[18]Todhunter, Ralph. The Institute of Actuaries Text-Book on Compound Interest and Annuitites Certain. London, Layton, 1901.Google Scholar
[19]Solomon, Ezra. The Theory of Financial Management. New York: Columbia University Press, 1963.Google Scholar
[20]Walters, James E. “Dividend Policies and Common Stock Prices.” Journal of Finance, XI, March 1956, pp. 29–41.Google Scholar
[21]Wendt, Paul F. “Current Growth Stock Valuation Models.” Financial Analysts Journal, XXI, March–April 1965, pp. 91–103.Google Scholar
[22]Williams, John Burr. The Theory of Investment Value. Cambridge, Massachusetts: Harvard University Press, 1938.Google Scholar