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Hi

please be very specific so i could understand the concepts . thank
you
The Price Didn't Go Up (Graded) After learning how to value a stock in his Corporate Finance class, Mark Stark decided to put his knowledge into practice and use the constant growth rate model to valu

User Thecarpy
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Sure, I'd be happy to explain the concepts more specifically.

The constant growth rate model, also known as the Gordon growth model, is a way to value a stock based on its future dividends and growth rate. The formula for the model is:

P = D / (r - g)

Where P is the stock price, D is the dividend per share, r is the required rate of return, and g is the expected growth rate of dividends.

Mark Stark likely used this model to value a stock he was interested in. However, if the price didn't go up after he calculated the value using the model, there could be a few reasons for this:

1. Market inefficiencies: The stock market is not always efficient, meaning that stock prices may not always reflect their intrinsic value. In some cases, the market may undervalue a stock, which could explain why Mark's valuation didn't result in a price increase.

2. Incorrect assumptions: The constant growth rate model relies on assumptions about the future growth rate and required rate of return. If Mark's assumptions were incorrect or unrealistic, his valuation may not have been accurate.

3. Changes in market conditions: The stock market is constantly changing, and changes in interest rates, inflation, or other market conditions could have affected the stock's price.

It's important to remember that stock valuations are not always perfect and that market prices can be influenced by a variety of factors. It's also important to conduct thorough research and analysis before investing in a stock.
User Vincent Robert
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