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    Describe a method used by analysts & investors to value a stock

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    There are many methods that are used by analysts and investors to value stock.

    A) Choose one of the methods and briefly describe this method.

    B) Give your opinion of why that method is useful in evaluating the stock of your choice (Example: use P/E ratio to evaluate Starbucks stock). Only one example is required.

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    Solution Preview

    A) One method that is used to value stock is the constant growth model or the Gordon model. To value a stock with this method, it needs the dividends that had just paid out to stockholders, D0, the required rate of return, r, and the constant growth rate, g. Here, ...

    Solution Summary

    The solution describes a method used by analyst and investors to value a stock.