Question
I need an answer to this discussion in 400-500 words. Please use the internet to look for Boeing stock drop march 2020 when covid crisis
I need an answer to this discussion in 400-500 words. Please use the internet to look for "Boeing stock drop march 2020" when covid crisis began. Please answer considering the dividend discount model. You can also use the "short selling stock" concept to answer this.
Boeing (BA) sold off 60% around the start (March 2020) of the COVID crisis. In light of the dividend discount model, P = D / (R - g), what do you think caused the stocks sell-off? Was the market taking down expectations about BAs dividend growth rate, or was the market demanding a higher expected return R from owning the stock, which now seemed riskier? In your opinion, how did the expected return (i.e., the R in the dividend discount model) change after BAs large realized (i.e., -60%) return? Be sure to fully explain your reasoning in your post.
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