Divident growth model application in LG 45 companies in Indonesia
Valuation of common stock is very important in the investment world but it its a very complex. Investors are eager to know how to valuate a common stock and know their true value in order to minimize the risk of picking the wrong stock or the riskier stock. This paper used dividend growth model as techniques to valuate common stocks in LQ45 stocks in Indonesia. This study was conducted to see the reliability of dividend growth model in predicting price of the stock. The predicted price were compared with the market prices and found out the differences between them. The research also shows the cause why dividend growth model has significance difference with the market price. This study also shows that the dividend that plays big role on dividend growth model also effects the stock price since dividend growth model is a model that explains the relationship between stock price and dividend payment at the specific period.
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