Document Type : Research Paper


1 Department of Finance and Banking, Aletheia University, 32 Chen-Li Street, 25103, New Taipei City, Taiwan (R.O.C.)

2 Department of Mathematics, National Taiwan University, No.1, Sec. 4, Roosevelt Rd., Taipei City 106, Taiwan (R.O.C.)


Although the classical dividend discount model (DDM) is a wellknown
and widely used model in evaluating the intrinsic price of common
stock, the practical pattern of dividends, required rate of return or growth rate
of dividend do not generally coincide with any of the model’s assumptions.
It is just the opportunity to develop a fuzzy logic system that takes these
vague parameters into account. This paper extends the classical DDMs to
more realistic fuzzy pricing models in which the inherent imprecise information
will be fuzzified as triangular fuzzy numbers, and introduces a novel

distance method to defuzzify these fuzzy parameters without considering the
membership functions. Through the conscientious mathematical derivation,
the fuzzy dividend discount models (FDDMs) proposed in this paper can be
regarded as one more explicit extension of the classical (crisp) DDMs, so that
stockholders can use it to make a specific analysis and insight into the intrinsic
value of stock.


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