Non-Inclusion Of Stock Sale and its Implication on the equity valuation
Why doesnt the price of a stock include the pv of potential sales procedes from the sale of the stock? [As its a cashflow from the investors point of view]
2 answers ( 0 marked as helpful)
Hi,
The price of the stock = the potential proceeds from the sale of the stock, right?
The two are very much the same thing.
Best,
Ned
Sorry for misrepresentation:-
In the video, we learnt that the PV of a stock is the sum of PV of all future dividends in the form of a perpetuity (typical DDM) , why don't we include the PV of the sale proceeds when an investor sells the stock as it is also a cash flow for the inventor.
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