3. ED company common stock sells for $27.51 a share. The stock is expected to pay adividend of $2.40 per share next year. ED's has established a pattern of increasing theirdividends by 4.5 percent annually and expects to continue doing so. What is the marketrate of return on this stock?A. 11.46%B. 8.72%C. 13.22%D. 5.55% 5. Consider a bond that offers a nominal yield of 6%. If the expected rate of inflation is 3%,according to the Fisher Effect, what is the real yield of the bond? (2 points)A) 2.91%of B) 3.00%C) 5.83%D) 9.00%evijegen inuocaibenom agnibivonq ylevitoste1

1. I used the Fisher Equation which links nominal yield, real yield, and inflation rate. The…

Answered: 3. ED company common stock sells for…

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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2
9.8. Valuing Preferred Stock Meteora, Inc., has an issue of preferred stock outstanding that pays a $3.75 dividend every year, in perpetuity. If this issue currently sells for $81 per share, what is the required return?
8. J.G. Corp's common stock is currently selling for $67.00. It is expected to pay a dividend of $3.00 at the end of the year. Dividends are expected to grow at a constant rate of 4% indefinitely. Compute the expected rate of return on J.G. Corp stock. (Hint: Review slides example) (2 points)
1. XYZ Corporation is currently paying a dividend of $1.5 per share and is expected to increase this dividend by 10% per year for the next two year. After this, dividends are expected to grow at a stable rate of 4% annually. If the required rate of return on the stock is 8%, what is the current value of a share? A. $40.00 B. $42.25 C. $47.19 D. $43.62 2. JW Corporation is expected to pay a dividend of $1.80 per share next year. After that, dividends are expected to grow by 3% annually indefinitely. The current stock price is $30.00. If your required rate of return is 10%, should you purchase the stock today? Why or why not? A. No; The stock has a present value of $31.50 per share. B. Yes; The stock has a present value of $31.50 per share. C. No; The stock has a present value of $25.71 per share. D. Yes; The stock has a present value of $25.71 per share. E. No; The stock has a present value of $36.00 per share.
J Pinkman Motors paid a dividend of $ 3.75 last year. If J Pinkmans return on equity is 24% and its retention rate is 25%, what is the value of the common stock if investors require a 20% rate of return? a. $ 38.39 b. $18.39 c. $82.39 d. $ 28.39
Easttown Productions just paid an annual dividend of $7.85 per share. Future dividends are expected to increase by 2 percent annually. What is one share of this stock worth at a required rate of return of 12.25 percent? A. $78.12 B. $100.88 C. $95.02 D. $76.59 E. $64.08
Jiffy Co. expects to pay a dividend of $3.00 per share in one year. The current price of Jiffy common stock is $60 per share. What is the cost of internal common equity (retained earnings) if the long-term growth in dividends is projected to be 9 percent indefinitely? a. 15 percent b. 14 percent c. 16 percent d. 13 percent
Intro Roller Inc. has just paid an annual dividend of $0.8. Analysts expect dividends to grow by 8% per year for the next 9 years, and then by 1.5% per year thereafter. The company has a required return of 12%. Part 1 Attempt 1/10 for 10 pts. What is the value of the stock now? 1+ decimals Submit
1. Tresnan Brothers is expected to pay a $1.00 per share dividend at the end of the year (i.e., D1 = $1.00). The dividend is expected to grow at a constant rate of 5% a year. The required rate of return on the stock, rs, is 7%. What is the stock's current value per share? Round your answer to the nearest cent. = $ 2. Holtzman Clothiers's stock currently sells for $15.00 a share. It just paid a dividend of $4.00 a share (i.e., D0 = $4.00). The dividend is expected to grow at a constant rate of 5% a year. What stock price is expected 1 year from now? Round your answer to the nearest cent.= $ What is the required rate of return? Do not round intermediate calculations. Round your answer to two decimal places. = %
Suppose a company will be in business for only the next 10 years and pays an annual dividend of $1.75 for those ten years. What is the present value of a share of stock for this company if we want a 9% return on the stock? O A. $19.08 O B. $15.97 OC. $26.59 O D. $11.23
Upland Motors recently paid a $1.48 per share annual dividend. Dividends are expected to increase by 2.5 percent annually. What is one share of this stock worth today if the appropriate discount rate is 14 percent? Select one: a. $14.16 b. $12.87 c. $12.25 d. $13.09 e. $13.04

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