DCF

CFA Level I
#1

Is the following correct: The expected dividend is used for the DCF, and this is calculated as expected return on portfolio - the risk free rate? IE Recent div £2.00 RF=4% Port expected return=13% So the Expected DIV should be £2.18 …is this correct? Thanks

#2

Expected dividend in a constant dividend growth model is based on the growth rate. So the expected dividend must be as: Recent dividend * (1+g) = expected dividend in period n

#3

Reineir Wrote: ------------------------------------------------------- > Is the following correct: > > The expected dividend is used for the DCF, and > this is calculated as expected return on portfolio > - the risk free rate? > > dont confuse yourself, for level 1 know these e® = RF + B(Rp-Rf) e® = div yld + g g = ROE * rr rr - 1 -dpo dpo - div per share/eps exp value = div (1-g)/r - g P/E = dpo/r-g learn these cold.

#4

Thanks, eighty Alright, so if the dividend is given as recent we should always convert to expected by adding the 1. But would we make any adjustments to ROE/Dividend Payout/Market Return if they were given at recent instead of expected?

#5

daj, This one "exp value = div (1-g)/r - g " did you mean exp value = div (1+g)/r - g ?

#6

newsuper Wrote: ------------------------------------------------------- > daj, > > This one "exp value = div (1-g)/r - g " > > did you mean > > exp value = div (1+g)/r - g ? YES! sorry, i was in a rush to catch the game.