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Constant-growth model |
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Definition of Constant-growth modelConstant-growth modelAlso called the Gordon-Shapiro model, an application of the dividend discount
Related Terms:constant-growth dividend discount modelVersion of the dividend discount model in which dividends grow at a constant rate. economic components modelAbrams’ model for calculating DLOM based on the interaction of discounts from four economic components. Gordon modelpresent value of a perpetuity with growth. log size modelAbrams’ model to calculate discount rates as a function of the logarithm of the value of the firm. QMDM (quantitative marketability discount model)model for calculating DLOM for minority interests r the discount rate Arbitrage-free option-pricing modelsYield curve option-pricing models. Asset pricing modelA model for determining the required rate of return on an asset. Asset pricing modelA model, such as the Capital Asset Pricing model (CAPM), that determines the required Binomial option pricing modelAn option pricing model in which the underlying asset can take on only two Black-Scholes option-pricing modelA model for pricing call options based on arbitrage arguments that uses Capital asset pricing model (CAPM)An economic theory that describes the relationship between risk and Deterministic modelsLiability-matching models that assume that the liability payments and the asset cash Discounted dividend model (DDM)A formula to estimate the intrinsic value of a firm by figuring the Dividend discount model (DDM)A model for valuing the common stock of a company, based on the Dividend growth modelA model wherein dividends are assumed to be at a constant rate in perpetuity. Extrapolative statistical modelsmodels that apply a formula to historical data and project results for a Factor modelA way of decomposing the factors that influence a security's rate of return into common and Garmen-Kohlhagen option pricing modelA widely used model for pricing foreign currency options. Growth managerA money manager who seeks to buy stocks that are typically selling at relatively high P/E Growth opportunityOpportunity to invest in profitable projects. Growth phaseA phase of development in which a company experiences rapid earnings growth as it produces Growth ratesCompound annual growth rate for the number of full fiscal years shown. If there is a negative Growth stockCommon stock of a company that has an opportunity to invest money and earn more than the Index modelA model of stock returns using a market index such as the S&P 500 to represent common or Internal growth rateMaximum rate a firm can expand without outside source of funding. growth generated Market modelThis relationship is sometimes called the single-index model. The market model says that the ModelingThe process of creating a depiction of reality, such as a graph, picture, or mathematical Net present value of growth opportunitiesA model valuing a firm in which net present value of new Pie model of capital structureA model of the debt/equity ratio of the firms, graphically depicted in slices of Present value of growth opportunities (NPV)Net present value of investments the firm is expected to make Single factor modelA model of security returns that acknowledges only one common factor. Single index modelA model of stock returns that decomposes influences on returns into a systematic factor, Simple compound growth methodA method of calculating the growth rate by relating the terminal value to Simple linear trend modelAn extrapolative statistical model that asserts that earnings have a base level and Single-index modelRelated: market model Stochastic modelsLiability-matching models that assume that the liability payments and the asset cash flows Sustainable growth rateMaximum rate of growth a firm can sustain without increasing financial leverage. Two-factor modelBlack's zero-beta version of the capital asset pricing model. Two-state option pricing modelAn option pricing model in which the underlying asset can take on only two Value-at-Risk model (VAR)Procedure for estimating the probability of portfolio losses exceeding some Yield curve option-pricing modelsmodels that can incorporate different volatility assumptions along the Capital Asset Pricing Model (CAPM)A model for estimating equilibrium rates of return and values of dividend growth methoda method of computing the cost growth ratean estimate of the increase expected in dividends Internet business modela model that involves Binomial modelA method of pricing options or other equity derivatives in Black-Scholes modelThe first complete mathematical model for pricing Markowitz modelA model for selecting an optimum investment portfolio, Constant dollar accountingA method for restating financial statements by reducing or capital asset pricing model (CAPM)Theory of the relationship between risk and return which states that the expected risk dividend discount modelComputation of today’s stock price which states that share value equals the present value of all expected future dividends. internal growth rateMaximum rate of growth without external financing. percentage of sales modelsPlanning model in which sales forecasts are the driving variables and most other variables are present value of growth opportunities (PVGO)Net present value of a firm’s future investments. sustainable growth rateSteady rate at which a firm can grow without changing leverage; plowback ratio × return on equity. Constant dollarsSee real dollars. Critical Growth PeriodsTimes in a company's history when growth is essential and without which survival of the business might be in jeopardy. growth fundsMutual funds that seek long-term capital growth. This type of fund invests primarily in equity securities. fractional interest discountthe combined discounts for lack of control and marketability. g the constant growth rate in cash flows or net income used in the ADF, Gordon model, or present value factor.
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