Valuing Coca Cola Stock
(3 pages of text)
In 1997, an investment advisor with a major brokerage firm gave investment suggestions and helped clients manage their portfolios. Some of her clients had Coca Cola stock in their portfolios and she wondered whether to recommend the stock to any of her new clients or clients that did not currently have Coca Cola in their portfolios. The case can be used to introduce the dividend discount model, capital asset pricing model, and price-earnings models.
The objectives of this case are to provide an:
- introduction to the valuation of a stock using the Dividend Discount Model (DDM)
- introduction to the P/E Multiple Model
- understanding of the application of the Capital Asset Pricing Model (CAPM)
- introduction to the use and analysis of data sources (such as Bloomberg, Value Line, Standard & Poors).
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