1. What would be the current desired stock price of a share of Bowden Corporation stock that pays a P2 dividend and will be worth P110 in 1 year? A 12% return on equity is required. P110 P98.21 P112 P100
1. What would be the current desired stock price of a share of Bowden Corporation stock that pays a P2 dividend and will be worth P110 in 1 year? A 12% return on equity is required. P110 P98.21 P112 P100
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Question
1. What would be the current desired stock price of a share of Bowden Corporation stock that pays a P2 dividend and will be worth P110 in 1 year? A 12% return on equity is required.
P110
P98.21
P112
P100
2. A stock has an expected return of 12.25 percent. The beta of the stock is 1.15 and the risk-free rate is 5 percent. What is the market risk premium?
7.25%
6.50%
6.30%
1.30%
15.00%
3. The dividends and stock price of Mimi Company are expected to grow at 5 percent per year at very far future year. Mimi’s common stock sells for P25 per share, its last dividend was P2.50, Mimi should pay P2.50 flotation cost. What is the expected return on retained earnings for Mimi Company?
15.5 percent
16.11 percent
15.00 percent
16.67 percent
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