price-dividend ratio


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price-dividend ratio

n
(Stock Exchange) the ratio of the price of a share on a stock exchange to the dividends per share paid in the previous year, used as a measure of a company's potential as an investment. Abbreviation: P-D ratio or PDR
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Changes in expected excess returns are responsible for most of the large high-frequency swings in the price-dividend ratio.
An analogous coefficient for the market price-dividend ratio, [A.
The simulations also show that the value premium across price-dividend ratio sorted portfolios is driven by a spread in the slow mean-reverting risk exposure.
They employed a log-linear approximation of stock returns and derived a linear relationship between the log price-dividend ratio and expectations of future dividends and stock returns.
If price-dividend ratios vary at all, then, then either (1) price-dividend ratios forecast dividend growth (2) price-dividend ratios forecast returns or (3) prices must follow a "bubble" in which the price-dividend ratio is expected to rise without bound.
Table 4 also shows the price-dividend ratio for each state, which we have divided by 2 to make it comparable with the more familiar PE ratio, commonly used for evaluating the level of prices on the stock market.
In this case changes in log dividends are stationary, so from (10) the log price-dividend ratio is stationary provided that the expected stock return is stationary.
If we impose a unit slope coefficient and test the stationarity of the log price-dividend ratio, the ADF test statistic is -3.
In their study, Campbell and Shiller also investigate the relation between the price-dividend ratio and stock price growth, which exhibits similar patterns.
Here, Ps, is the log price-dividend ratio for country s, G[sub st] is defined as [delta (difference)
The price-dividend ratio has about doubled in the postwar era, and this increase could well be a surprise.
Alternatively, investors might use past levels of the price-dividend ratio to forecast future dividend growth because this ratio has been found to successfully predict stock prices in the empirical literature.