My friend just explained this to me.
The Feldblum model uses last year-end dividend, so it must grow by (1+G) to
get to this year's amount. The other one starts with this year's amount
(expected?) so the (1+G) factor is not needed...
Is this right?
Kim Ward
CNA
----------
From: aschwart@mail.doi.state.nc.us
To: Ward,Kimberley A.; studygroup10@lists.casact.org
Cc: jdonalds@mail.doi.state.nc.us; drosenzw@mail.doi.state.nc.us;
delia@mail.doi.state.nc.us
Subject: Stock Dividend Model
Date: Thursday, April 09, 1998 2:29PM
One version of the Gordon Shapiro model is shown on page 5-53 of the
Maginn & Tuttle reading; another version is shown on page 141 of
Feldblum's paper on Asset Liability Matching. The versions differ by
the factor 1+G. I think the version in the Feldblum paper is correct.
Would anyone agree?
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