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A publicly traded company that pays dividends
Select a publicly traded company that pays dividends. You may select any publicly traded company that pays dividends, or choose one of the companies discussed in Best Dividend Stocks for Dependable Dividend Growth. Determine the most recent stock price and the total dividends paid over the past year. Calculate the current dividend yield on the stock. Calculate the required rate of return (Ke) for an investment in the common stock. You should use formula 10-9 in the textbook (SEE PICS) for this calculation and use an assumed growth rate of 5 percent. Identify the current P/E ratio for the company from a source such as Yahoo! Finance or Barron’s. In your post,
Show your calculations of the dividend yield and required rate of return (Ke) and present the P/E ratio. Explain the relationship between your chosen company’s Ke and P/E ratio and what that relationship indicates about the risk of the company’s future cash flows. Explain whether the general relationship between a high Ke and a low P/E ratio (or low Ke and high P/E ratio) is supported by the data for your chosen publicly traded company. Predict the impact on the company’s stock price based on your forecast that the company will grow its dividends by a rate higher than 5%. Compare your company’s P/E ratio with the P/E ratios of two other companies in its industry. Hypothesize which company in this industry should have the lowest Ke based on the P/E comparisons. Summarize the connection between a company’s growth rate, its required rate of return, and its value (stock price).
Sample Answer
The gender pay gap is partly attributed to systemic differences in how men and women approach power, negotiation, and risk-taking, often influenced by societal gender stereotypes and the resulting social backlash against women for exhibiting "male" traits (Result 1.1, 4.4). These differences, though often small, compound over a career leading to significant earnings disparities (Result 2.2, 4.3).
Women's Approach to Negotiation, Power, and Risk
Several elements in women's approach and the response they receive from others can lead to lower earnings:
Lower Propensity to Initiate Negotiation: Research consistently shows that women are less likely than men to initiate a negotiation for a higher salary or compensation (Result 1.1, 1.3, 1.4). Even minor gender differences in initiating a negotiation at the start of a career can result in substantial lost income over a lifetime (Result 4.3).
This effect is particularly pronounced in ambiguous situations where the opportunity to negotiate is not explicitly stated (Result 1.4, 1.5).
Fear of Social Backlash: Women often anticipate and fear the negative social consequences of being assertive or aggressive in a negotiation, which are behaviors that align with the male stereotype but clash with the "communal" female stereotype (Result 1.2, 1.1, 4.4, 2.2).
This fear of backlash mediates women's behavior, leading to quicker concessions and less assertive negotiation strategies when negotiating for themselves (Result 4.4).
Lower Entitlement and Compensation Expectations: Studies suggest that women often enter negotiations with lower pay expectations and tend to undervalue their worth compared to men (Result 1.2, 4.2). This lower expectation can become a self-fulfilling prophecy.
Negotiating for Others vs. Self: Women often negotiate as assertively and effectively as men when they are advocating for others (e.g., employees or an organization), as this is seen as a communal, gender-congruent role. However, this assertiveness is significantly reduced when negotiating for their own salary (Result 4.4, 2.2).
Risk Aversion and Competition: Women, even high-performing ones, have been found to be less likely than men to choose a competitive or "tournament" based payment scheme, potentially forgoing higher earnings (Result 2.1).
Strategies for Effective Power, Negotiation, and Risk Management
To mitigate these effects, strategies can be employed by individuals and organizations: