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COMMON STOCK VALUATION
**Concept: **Understand how common stocks are valued.
There are basically three ways of valuing common stock: 1) using the present value of future dividends, 2) using the present value of free cash flow, and 3) using the present value of current activities + the present value of growth opportunities. Here, we look at each of these methods individually.
**Objectives:**
- Understand and define how common stocks are valued
- Discuss and demonstrate how common stocks are valued by future dividends
- Discuss and demonstrate how common stocks are valued by free cash flow
- Discuss and demonstrate how common stocks are valued by the value of current activities and growth opportunities (PVGO)
- Understand and define expected return
- Understand and define market capitalization rate
- Understand the concept of EPS and P/E Ratio
- Discuss and demonstrate how stock price relates to EPS and P/E Ratio
**Suggested
Grades:**
Ninth Grade -
Tenth Grade - Eleventh Grade - Twelfth Grade - College - Adult Education
- Business Education |