Food Delivery Services (FDS) share price is worth $18 today. In a year, the market formeal prep delivery could expand and FDS could gain market share leading to a priceof $25 per share with probability of 30%. The market could expand leading to a priceof $20 per share with this being the most likely at a probability of 45%. The marketcould not have the expected uptake leading to a price of $16 with a probabilityassociated with this state of 25%. No dividends are expected.What is the expected return of this stock and what is the volatility of the stock'sreturn?13.9%, 18.7%20.5%, 3.4%12.9%, 6.4%13.9%, 9.6%

In case of probabilistic data, returns are calculated using the various expected returns with…

Answered: Food Delivery Services (FDS) share…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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A company has a beta of 0.25. If the market return is expected to be 8 percent and the risk-free rate is 2 percent, what is the company's required return? Multiple Choice __ 1.50 percent ___ 3.50 percent ___ 4.00 percent ___ 13.50 percent
Jersey Jewel Mining has a beta coefficient of 1.1. Currently the risk-free rate is 2 percent and the anticipated return on the market is 8 percent. JJM pays a $5.40 dividend that is growing at 4 percent annually. Do not round intermediate calculations. a. What is the required return for JJM? Round your answer to two decimal places. % b. Given the required return, what is the value of the stock? Round your answer to the nearest cent. $ c. If the stock is selling for $138, what should you do? The stock -Select- overvalued and -Select- ✓ be purchased. d. If the beta coefficient declines to 0.9, what is the new value of the stock? Round your answer to the nearest cent. $ e. If the price remains $138, what course of action should you take given the valuation in d? The stock is -Select- and -Select- ✓ be purchased.
Jersey Jewel Mining has a beta coefficient of 1.3. Currently the risk-free rate is 2 percent and the anticipated return on the market is 8 percent. JJM pays a $5.30 dividend that is growing at 6 percent annually. Do not round intermediate calculations. What is the required return for JJM? Round your answer to two decimal places. % Given the required return, what is the value of the stock? Round your answer to the nearest cent. $ If the stock is selling for $166, what should you do? The stock -Select-isis notItem 3 overvalued and -Select-shouldshould notItem 4 be purchased. If the beta coefficient declines to 1.2, what is the new value of the stock? Round your answer to the nearest cent. $ If the price remains $166, what course of action should you take given the valuation in d? The stock is -Select-overvaluedundervaluedItem 6 and -Select-shouldshould notItem 7 be purchased.
Give typing answer with explanation and conclusion 1. If the value of sustainable investing is $171.1 and the discount rate is 8% while the value of non-sustainable investing is $15.7 and the company has a 28.7% probability of being sustainable. What is the expected value today of the company given a 18 year horizon? (Answer to 2 decimal places in $).
There are two states of the world tomorrow. With probability 1/6, the economy will be good. With probability 5/6, the economy will be bad. IBM stock return will be 15% if the economy is good, 1% if the economy is bad. Dell stock return will be 25% if the economy is good, −10% if the economy is bad. You own $1,000 of IBM and $3,000 of Dell. What is the expected return of your portfolio? What are the covariance and correlation of IBM and Dell stock returns? What is the variance of your portfolio? Please answer fast i give you upvote.
Adobe Systems has come out with a new and improved product. As a result, the firm projects an ROE of 22.5%, and it will maintain a plowback ratio of .50. Its projected earnings are $3.75 per share. Investors expect an 18% rate of return on the stock. At what price and P/E ratio would you expect the firm to sell and what is the preset value of growth opportunities?
ces A manager believes his firm will earn a return of 23.80 percent next year. His firm has a beta of 1.69, the expected return on the market is 16.30 percent, and the risk-free rate is 6.30 percent. Compute the return the firm should earn given its level of risk. (Round your answer to 2 decimal places.) Required return Determine whether the manager is saying the firm is undervalued or overvalued.. undervalued % overvalued
You are trying to value the stocks of Imaginary Inc. The company is currently involved ina very risky, but potentially very profitable project. In the preceding year, the companyhad earnings of $10 per share. You expect the earnings per share to grow to $15, $20, and$25 in the next three years, after which you expect a growth rate of 2%. The companyalways applies a plowback ratio of 60%. You estimate that a risk-adjusted discount rateof 10% is appropriate.a). What are the expected dividends per share in the next three years?b). What is the expected price per share three years from now?c). What is the fair stock price per share today?
What about Kraft Heinz? They currently pay an annual divendend of $3.96 and we expect that to grow at a constant rate of 2.5% . Assuming the market requires a(n) 8.5% return from Kraft Heinz, what is their stock worth? (Answer with 2 decimals.)
10) Hoping-To-Meme (HTM), a movie theater chain, just paid a dividend of $5. Dividends are expected to grow at a constant rate of 4% per year from this point onward. HTM's stock has a beta of 0.9. The risk-free rate is 5%, and the expected return on the market portfolio is 12%. a. What is the market capitalization rate for HTM? b. Compute the intrinsic value of HTM's stock. Foc MacBook Pro A
Determining ROE to Yield Projected PBAlphabet Inc., formerly Google Inc. recently had a market cap of $852.83 billion, total equity of $192.19 billion, and 693.4 million shares outstanding. PB of Facebook and eBay Inc. were 6.11 and 8.245. With a minimum 10% annual return on our investments, and that we believe Alphabet will sell at 6.0 times book value five years from now. What must Alphabet earn (ROE) on average over the next 5 years to make it a worthwhile investment? (Assume that Alphabet pays no dividends

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