27 Stock Prices

This video introduces the fundamental steps for valuing common stocks, beginning with the concept of expected return for investors. We break down the expected return into its two key components: the dividend yield, representing return from dividends, and capital gain, reflecting the change in stock price. Learn how to mathematically express expected return and then rearrange the equation to determine the present value, or current price (P0), of a stock. This initial valuation model considers expected future dividends and prices, discounted by the expected return, and can be generalized across any time period. Visit AxiomTutoring.com for more resources and subscribe to @AxiomTutoringCourses for expert financial education.