# stock.price: Computing stock prices In RcmdrPlugin.RiskDemo: R Commander Plug-in for Risk Demonstration

## Description

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

## Usage

 ```1 2``` ```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

 ```1 2 3``` ``` 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
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
call: fun(...)
4: no DISPLAY variable so Tk is not available
\$dividend
 1

\$k
 0.12

\$g
 0.1

\$PVGO
 NA

\$stockPrice
 50

\$dividend
 1

\$k
 0.122

\$g
 0.1

\$PVGO
 35.20864

\$stockPrice
 45.45455
```

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