stock.price: Computing stock prices

Description Usage Arguments Details Value Author(s) References Examples

View source: R/stock.price.R

Description

This function computes the intrinsic stock price using the constant growth dividend discount model.

Usage

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stock.price(dividend, k = NULL, g = NULL, ROE = NULL, b = NULL, 
  riskFree = NULL, marketPremium = NULL, beta = NULL)

Arguments

dividend

expected dividend(s) for the next year(s) (in euros), separated by commas

k

required rate of return

g

growth rate of dividends

ROE

return on investment

b

plowback ratio

riskFree

riskfree rate

marketPremium

market risk premium

beta

beta

Details

All the above rates are given in percentages (except the dividends). One should provide either k or the following three: riskFree, marketPremium, beta. Further, one should provide either g or the following two: ROE and b. In the output, k and g are given in decimals.

Value

dividend

expected dividend(s) for the next year(s) (in euros)

k

required rate of return

g

growth rate of dividends

PVGO

present value of growths opportunities

stockPrice

intrinsic stock price

Author(s)

Arto Luoma <arto.luoma@wippies.com>

References

Bodie, Kane, and Marcus (2014) Investments, 10th Global Edition, McGraw-Hill Education, (see Dividend Discount Models in Section 18.3).

Examples

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  stock.price(dividend=c(1),k=12,g=10)
  stock.price(dividend=c(1),ROE=50,b=20,riskFree=5,marketPremium=8,
              beta=90)

Example output

Loading required package: rgl
Loading required package: demography
Loading required package: forecast
This is demography 1.22 

Warning messages:
1: In rgl.init(initValue, onlyNULL) : RGL: unable to open X11 display
2: 'rgl_init' failed, running with rgl.useNULL = TRUE 
3: .onUnload failed in unloadNamespace() for 'rgl', details:
  call: fun(...)
  error: object 'rgl_quit' not found 
4: no DISPLAY variable so Tk is not available 
$dividend
[1] 1

$k
[1] 0.12

$g
[1] 0.1

$PVGO
[1] NA

$stockPrice
[1] 50

$dividend
[1] 1

$k
[1] 0.122

$g
[1] 0.1

$PVGO
[1] 35.20864

$stockPrice
[1] 45.45455

RcmdrPlugin.RiskDemo documentation built on April 6, 2021, 5:06 p.m.