Week 2 Discussion

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Prior to beginning work on this discussion forum, read Chapter 10 in the textbook. The value of a common stock is based on the present value of the future cash flows that will accrue to that stock. Of course, the present value calculation necessarily involves the use of a required rate of return (a discount rate) which reflects the risk. The textbook indicates that “To some extent, the two concepts of P/E ratios and dividend valuation models can be brought together. A stock that has a high required rate of return (Ke) because itâ€s risky will generally have a low P/E ratio. Similarly, a stock with a low required rate of return (Ke) because of the predictability of positive future performance will normally have a high P/E ratio” (Block et al, p. 322). In this discussion, you will examine the relationship between a stockâ€s required rate of return and its P/E ratio.Initial Response:For this discussion forum,Watch the video, Dividend Discount Model (DDM) (Links to an external site.).Select a publicly traded company that pays dividends. You may select any publicly traded company that pays dividends, or choose one of the companies discussed in 65 Best Dividend Stocks You Can Count On in 2021 (Links to an external site.).Determine the most recent stock price and the total dividends paid over the past year.Calculate the current dividend yield on the stock.Calculate the required rate of return (Ke) for an investment in the common stock. You should use formula 10-9 in the textbook to do this calculation and use an assumed growth rate of 5%.Identify the current P/E ratio for the company from a source such as Yahoo! Finance or Barronâ€s.In your post,  Show your calculations of the dividend yield and required rate of return (Ke), and present the P/E ratio.Explain the relationship between your chosen companyâ€s Ke and P/E ratio and what that relationship indicates about the risk of the companyâ€s future cash flows.Explain whether the general relationship between a high Ke and a low P/E ratio (or low Ke and high P/E ratio) is supported by the data for your chosen publicly traded company.Predict the impact on the companyâ€s stock price based on your forecast that the company will grow its dividends by a rate higher than 5%.Compare your companyâ€s P/E ratio with the P/E ratios of two other companies in its industry.Hypothesize which company in this industry should have the lowest Ke based on the P/E comparisons.Summarize the connection between a companyâ€s growth rate, its required rate of return, and its value (stock price).Be sure to think strategically and apply the concepts from the course textbook.Your initial response should be a minimum of 200 words. Graduate school students learn to assess the perspectives of several scholars. Support your response with at least one scholarly and/or credible resource in addition to the text.Guided Response: Respond to at least two of your fellow students†or instructor posts in a substantive manner and provide information or concepts that they may not have considered. Each response should have a minimum of 100 words and be respectful of others†opinions and beliefs that differ from your own. You are encouraged to post your required replies earlier in the week to promote more meaningful and interactive discourse in this discussion forum. Continue to monitor the discussion forum until Day 7 and respond with robust dialogue to anyone who replies to your initial post. “Looking for a Similar Assignment? Get Expert Help at an Amazing Discount!”The post Week 2 Discussion appeared first on nursing writers.”Do you need a similar assignment done for you from scratch? We have qualified writers to help you with a guaranteed plagiarism-free A+ quality paper.