Discounted Dividend Valuation
Free CFA Level II lesson in Equity Valuation. 15 min read, ~2,283 words.
GGM: Value =, where the numerator is D-one, NOT D-zero. Compute as a separate first step. Sustainable growth = ROE x retention ratio. DuPont decomposition reveals whether ROE is driven by margins, efficiency, or leverage. If ROE r, retaining earnings creates value; if ROE < r, retaining earnings DESTROYS value...
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What this lesson covers
- Content
- Example 1
- Example 2
- Common Mistakes
- Check Your Understanding
- Exam Shortcuts
Learning objectives
- discounted dividend valuation
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