Discounted Dividend Valuation
Free CFA Level II lesson in Equity Valuation. 14 min read, ~2,117 words.
GGM: Value = D1 / (r - g), the numerator is D-one, NOT D-zero. 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. PVGO =...
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What this lesson covers
- Content
- Example 1
- Example 2
- Common Mistakes
- Key Takeaways
- Exam Shortcuts
Learning objectives
- discounted dividend valuation
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