CFAI Mock March 2014 Morning / Case GreenSnacks

CFA Level II Equities
#1

Concerning Question 4.)

Can anyone explain how they derive d = 0.037? They state that d = D/P and if I use the industry data I would get D = 0.65*2.45 and P = 21.875

Second: the formula: g = (r-g)/(1+d) should be wrong, right? It should be stated g = (r-d)/(1+d)

Thanks for help!

#2

i got it from second formula

P=D(1+G)/R-G

agree?

now they rearrange the equation simple maths

P/D =(1+G)/R-G

now to get into dividend yield mode

we rearrange

D/P = (R-G)/1+G

plug the numbers get the growth.

hope that helped

#3

Thanks Sc0rPio.

laugh crying laugh

NOW I see, there is given “trailing dividend yield (%)” - I read over…hahahaha

However, the second formula stated above should be right and the formula presented in the solution (see also my comment above) should be wrong.

#4

hahahha reading is the most crucial part…

gud luck

#5

For this question, why can’t we use g=b*ROE formula? Please help!!