Ge Stock Value

Two investors are evaluating GE stock for a possible purchase. They agree on the expected value of D1 and also on the rate of growth expected dividend furture. They also agree on the degree of risk of the stock. However, one investor normally holds stocks for 2 years, while the other holds stocks for 10 years. Should they both be willing to pay the same price for GE equipment?

Time does not matter. It is when you sell that matters.
investors will receive the same price, assuming they sell the same minute of the day.

Chances are that 10 years have won more dividends than the 2-year investor. This is the big difference.

If I were you I will not sell GE now. It goes to 50% less than a year ago. You will experience a loss. Over time, it will therefore hold on to it.

No one (seller) cares how long they (the buyer) will hold.

The seller wants to get the highest price possible. The buyer wants to pay the lowest price possible. Together, they agree to a perception of a common accpeptable price. If a buyer percieves the stock is worth less because of the time they will hold the stock ... so they can offer to buy at this price.

The seller may say yes or no ..... and if they ask for more ... find another buyer.