Investment Opportunities and Gordons Stock Valuation Model-A Note

Ragunathan V and Srinivasan G

IIMA Working Papers from Indian Institute of Management Ahmedabad, Research and Publication Department

Abstract: The traditional stock valuation model incorporating growth opportunities, fails to recognise the investment opportunities constraint. As a result the conventional model fails to provide an optimum reinvestment ratio and instead provides merely a limit for the same. This note recognises the opportunities constraint explicitly and in the process provides an expression for optimal reinvestment ratio.

Date: 1985-10-01
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Persistent link: https://EconPapers.repec.org/RePEc:iim:iimawp:wp00664

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