PDF Finance for Everyone Special Applications: Stocks

FINANCE Pricing a Stock § How is a stock priced? § Let P 0 be today's stock price § Let P 1 be the expectedstock price next year § Assume the expecteddividend at the end of the year is D 1 § Suppose a stock with a similar risk has an expected return of r § Since a very long-lived asset, let us go one period at a time… ................
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