B D E F G H L M 1 Stock Market vs. The Economy Video Link: Stock Market vs Economy Instructions: Input formulas into the yellow spaces to do stock calculations 2. 3 4 5 6 7 8 Dividend Yield Stock price Dividend Dividend yield $50.00 4.00 100 $120 Stock Splits Shares Owned Value per Share Investment value Stock split New share value New shares owned Formula: Dividend - Stock price Stock price + Earnings per share 3 to 1 Price/Earnings (P/E) Ratio Stock price $104.00 Earnings per Share (EPS) 6.50 P/E Ratio Type of Calculation: Dividend Yield Price/Earnings (P/E) Ratio Book Value per Share: a. Book value b. Book value per share: Stock Splits: a. Investment value b. New share value Total assets - Total liabilities Book value + Shares outstanding Discounted Dividends Valuation Current dividend $5.00 Expected growth 4% Expected dividend Required return 12% Estimated stock value Shares owned x Value per share Value per share - Stock split value (example. a 3:1 stock split means the value is 3) Shares owned x Stock split value 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Book Value per Share Total Assets 12,000,000 Total Liabilities 4,000,000 Book value: Shares Outstanding 300,000 Book Value per Share c. New shares owned Discounted Dividends Valuation a. Expected dividend b.Estimated stock value: Stock Betas: a. Stock movement b.Estimated stock value: Current dividend x (1 + Expected growth) Current dividend + (Required return - Expected growth) Stock Betas Stock price Beta Market movement Stock movement Estimated stock value $30.00 1.17 20.0% Beta x Market movement Stock price x (1 + Stock movement)