Selected Additional References and Cases 223Selected Additional References and Cases
Many investment textbooks cover stock valuation models in depth,
and some are listed in the Chapter 3 references.
For some recent works on valuation, see
Bey, Roger P., and J. Markham Collins, “The Relationship
between Before- and After-Tax Yields on Financial As-
sets,” The Financial Review,August 1988, 313–343.
Brooks, Robert, and Billy Helms, “An N-Stage, Fractional
Period, Quarterly Dividend Discount Model,” Financial
Review,November 1990, 651–657.
Copeland, Tom, Tim Koller, and Jack Murrin, Valuation:
Measuring and Managing the Value of Companies,3rd ed.
(New York: John Wiley & Sons, Inc., 2000).
The following cases in the Cases in Financial Managementse-
ries cover many of the valuation concepts contained in this chapter:
Case 3, “Peachtree Securities, Inc. (B)”; Case 43, “Swan-
Davis”; Case 49, Beatrice Peabody”; and Case 101,
“TECO Energy.”k. What is market multiple analysis?
l. Why do stock prices change? Suppose the expected D 1 is $2, the growth rate is 5 percent,
and rsis 10 percent. Using the constant growth model, what is the price? What is the impact
on stock price if g is 4 percent or 6 percent? If rsis 9 percent or 11 percent?
m. What does market equilibrium mean?
n. If equilibrium does not exist, how will it be established?
o. What is the Efficient Markets Hypothesis, what are its three forms, and what are its impli-
cations?
p. Bon Temps recently issued preferred stock. It pays an annual dividend of $5, and the issue
price was $50 per share. What is the expected return to an investor on this preferred
stock?