+- HP Forums (https://www.hpmuseum.org/forum)
+-- Forum: HP Software Libraries (/forum-10.html)
+--- Forum: General Software Library (/forum-13.html)
+--- Thread: (12C/17B/19B etc) Multi-Stage Stock Pricing w / … (/thread-22045.html)
(12C/17B/19B etc) Multi-Stage Stock Pricing w / … - SlideRule - 07-18-2024 12:24 PM
An excerpt from Multi-Stage Stock Pricing with a Financial Calculator, Tom Arnold, CFA, CIPM, The Robins School of Business, Department of Finance, University of Richmond VA, June 5, 2020, 11 pages
Multi-Stage Stock Pricing with a Financial Calculator
Alexander, Arnold and Wu (2020) introduce an algorithm for multi-stage stock pricing that
uses a present value annuity structure. This algorithm is adapted for a financial calculator
by using an iterative bond pricing structure.
INTRODUCTION
Alexander, Arnold, and Wu (AAW, 2020) generate an algorithm for pricing a stock
when there is a period of abnormal dividend growth (G1) that lasts “N1” periods. After the
N1 periods, the “normal” dividend growth rate “g” is applied in perpetuity. Defining “k”
as the periodic discount rate and “D0” as the current or most recent dividend, …
…
In this paper, we introduce an iterative bond pricing process which implements the
AAW algorithm. In section one, we demonstrate the process with a numerical example
and demonstrate that the process can be implemented on a financial calculator and in an
Excel spreadsheet. In section two, the financial calculator process is demonstrated to be
numerically consistent with the traditional calculation method and correspondingly the
AAW algorithm.
…
ITERATIVE PROCESS FOR A FINANCIAL CALCULATOR
…
WHY DOES THIS WORK?
…
CONCLUSION
…
REFERENCES:
…
BEST!
SlideRule