CH14 P10: The constant-growth dividend discount model can be used both for the valuation of companies and for the estimation of the long-term total return of a stock.

Assume: $20 = Price of a Stock Today

8% = Expected Growth Rate of Dividends

$0:60 = Annual Dividend One Year Forward

a. Using only the preceding data, compute the expected long-term total return on the stock using the constant-growth dividend discount model.

b. Briefly discuss three disadvantages of the constant-growth dividend discount model in its application to investment analysis.

c. Identify three alternative methods to the dividend discount model for the valuation of companies.

CH15 Q14: What is the purpose of computing a moving-average line for a stock? Describe a bullish pattern using a 50-day moving-average line and the stock volume of trading. Discuss why this pattern is considered bullish.

CH15 Q15: Assuming a stock price and volume chart that also contains a 50-day and a 200-day MA line, describe a bearish pattern with the two MA lines and discuss why it is bearish.