
Accession Number : AD0612355
Title : ON THE EVALUATION OF GROWTH EQUITY SHARES.
Descriptive Note : Working paper,
Corporate Author : CALIFORNIA UNIV LOS ANGELES
Personal Author(s) : Reisman,Arnold
Report Date : FEB 1965
Pagination or Media Count : 17
Abstract : A mathematical model for equity share valuation or price is developed. The model incorporates the three hypotheses that individually have constituted the bases of previous works in the area. (1) In the pure earnings hypothesis, the price of a share of stock is considered to be the discounted worth of its earnings in perpetuity. (2) In the pure dividend hypothesis, the price is considered to be the discounted worth of future dividends to perpetuity. (3) In the finite horizon hypothesis, the price is assumed to be equal to the discounted worths of dividends, to be paid within a given and finite horizon of a certain number of periods, and the estimated value of the share at the end of that time. The model also permits growth to be financed by any combination of the common methods. By assigning specific values to some of the parameters, the model reduces to most well known models of the literature.
Descriptors : (*COSTS, MATHEMATICAL MODELS), (*COMMERCE, COSTS), (*ECONOMICS, THEORY), EQUATIONS
Distribution Statement : APPROVED FOR PUBLIC RELEASE