ATAR Notes: Forum

Uni Stuff => Commerce => Faculties => Finance => Topic started by: QuantumJG on November 07, 2009, 11:42:41 am

Title: Confused with this question!
Post by: QuantumJG on November 07, 2009, 11:42:41 am: In revision to my finance 1 exam I came across a question like this (look at the image) and I'm confused!

What exactly does dividend yield mean? Is it:

$yield = \dfrac{dividend payout}{share price}$

Gordon's Growth Model:

$P_{o} = \dfrac{D_{o}*(1+g)}{k-g}$

so yield by Gordon's growth model can be:

$\dfrac{D_{o}}{P_{o}} = \dfrac{k-g}{1+g}$

is there a flaw in this reasoning or not.

But I don't understand what is mean't by a price trap!

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