number 2
Yahoo Finance is a financial website that can be used to find information about stocks. From yahoo.com, click on 'Finance' near the top of the page. On the right side of the page near the top, start typing the name of a company in the box that says 'Quote Lookup', and it will give you a list of possible companies you are looking for. When you find your company and its information comes up, you can find dividend information at the bottom of the second column, Use this information to answer the following questions: What is the annual dividend amount paid by Harley Davidson common stock? 1. 1.50 (374) 2. The historical average return on common stock is approximately 12%, but the expected return is probably less currently. Using 6% as your required return and a dividend growth rate of 2 % a. What is the expected price of Harley Davidson stock? What is the actual price? (This is the large bold number at the top of the screen.) b. Using a 6 % required return and a 2% growth rate: a. Determine the expected price for Alliant Energy. 3. b. What is the actual price? Compare. 4. Remember that a different formula is used when finding the expected price of preferred stocks a. What is the Dividend for Du Pont Preferred A Stock? b. Remember that the preferred stock price formula is the same as the perpetuity formula. Using a required rate of return of 6%: 1. What is the expected price of Du Pont Preferred A? 2. What is the actual price? 5. Obviously, the accuracy of the dividend growth model is dependent on the required return and growth rates used. Do you feel that the dividend growth model is a valid approach to valuing stocks? Yahoo Finance is a financial website that can be used to find information about stocks. From yahoo.com, click on 'Finance' near the top of the page. On the right side of the page near the top, start typing the name of a company in the box that says 'Quote Lookup', and it will give you a list of possible companies you are looking for. When you find your company and its information comes up, you can find dividend information at the bottom of the second column, Use this information to answer the following questions: What is the annual dividend amount paid by Harley Davidson common stock? 1. 1.50 (374) 2. The historical average return on common stock is approximately 12%, but the expected return is probably less currently. Using 6% as your required return and a dividend growth rate of 2 % a. What is the expected price of Harley Davidson stock? What is the actual price? (This is the large bold number at the top of the screen.) b. Using a 6 % required return and a 2% growth rate: a. Determine the expected price for Alliant Energy. 3. b. What is the actual price? Compare. 4. Remember that a different formula is used when finding the expected price of preferred stocks a. What is the Dividend for Du Pont Preferred A Stock? b. Remember that the preferred stock price formula is the same as the perpetuity formula. Using a required rate of return of 6%: 1. What is the expected price of Du Pont Preferred A? 2. What is the actual price? 5. Obviously, the accuracy of the dividend growth model is dependent on the required return and growth rates used. Do you feel that the dividend growth model is a valid approach to valuing stocks
