For questions (1-6) bold the correct answer or completewith your result if none is correct.(1-2) The expected return on a stock with a current price of 20lei is 16%. The corporation is expected to deliver a dividendof 1.2 lei per share.[1] The dividend yield expected by the investor equals:(a) 4% (b) 6% (c) 8% (d) 12%[2] The selling price of the stock equals:(a) 22 lei (b) 24 lei (e) 26 lei (d) 30 lei(3-4) The table below presents the cash-flows associated to aninvestment project:YearCash-flow-1000 700 800012[3] For a cost of capital of 10% the NPV equals:(a) 297.52 (b) 500 (c) 363.64 (d) 388.43[4] The internal rate of return of the project is:(a) 28% (b) 31.05% (c) 34% (d) 36.1%(5-6) Consider assets A and B with expected returns ofE(R)=10% and E(R)=20% and standard deviations of 6%and 8%. The correlation coefficient between A and B equals0.1. You have a total budget of 100000 mu and you want toinvest 10000 mu in stock A and the difference in stock B.[5] The expected return of your portfolio equals:(a) 17% (b) 19% (c) 16% (d) 15%[6] The standard deviation of the portfolio is:(a) 5.63% (b) 7.87% (c) 6.54% (d) 7.28%For applications (7-10) fill in the blanks ......(7) The annual rates of return for a stock is given in the tablebelow:Year1 2 3 4 5Rate of return 5% 7% -4% 2% 9%The five-year holding period return equals...(8) Consider projects A and B with the following forecastednet present values sensitive to the evolution of the economy:Seenario I (p=0.3) II (p=0.7)A (mil. Lei)4B (mil. Lei)26.Use the coefficient of variance to select the preferableproject.CVA=....CVB=......

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For questions (1-6) bold the correct answer or complete with your result if none is correct. (1-2) The expected return on a stock with a current price of 20 lei is 16%. The corporation is expected to deliver a dividend of 1.2 lei per share. [1] The dividend yield expected by the investor equals: (a) 4% (b) 6% (c) 8% (d) 12% [2] The selling price of the stock equals: (a) 22 lei (b) 24 lei (c) 26 lei (d) 30 lei (3-4) The table below presents the cash-flows associated to an investment project: Year Cash-flow-1000 700 800 012 [3] For a cost of capital of 10% the NPV equals: (a) 297.52 (b) 500 (c) 363.64 (d) 388.43 [4] The internal rate of return of the project is: (a) 28% (b) 31.05% (c) 34% (d) 36.1%

For questions (1-6) bold the correct answer or complete with your result if none is correct. (1-2) The expected return on a stock with a current price of 20 lei is 16%. The corporation is expected to deliver a dividend of 1.2 lei per share. [1] The dividend yield expected by the investor equals: (a) 4% (b) 6% (c) 8% (d) 12% [2] The selling price of the stock equals: (a) 22 lei (b) 24 lei (c) 26 lei (d) 30 lei (3-4) The table below presents the cash-flows associated to an investment project: Year Cash-flow-1000 700 800 012 [3] For a cost of capital of 10% the NPV equals: (a) 297.52 (b) 500 (c) 363.64 (d) 388.43 [4] The internal rate of return of the project is: (a) 28% (b) 31.05% (c) 34% (d) 36.1%

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
3. In one year, Bold Betties Inc. will pay a $3 per share dividend and it is expected to grow by 3 percent per year. If the required return on this stock is 12 percent, what is the current stock price? Hint: Po = Dox(1+g) R-g # 3 E 4. In one year, Bold Betties Inc. will pay a $6 per share dividend and it is expected to grow by 4 percent per year. If the required return on this stock is 10 percent, what is the current stock price? Hint: Po = $ 4 R % 5 F5 T Dox(1+g) R-g * ^ D₁ R-g 6 F6 D₁ R-9 Y * F7 & 7 U PrtScn F8 8 Home F9 9 End F10 0 PgUp F11 P
D. (1) The shares of BrightStark Ltd. are expected to generate the following possible returns in one year. What is the expected return over the next 12 months? Assume that the stock pays no dividends. Return 3% 4% 7% 15% 25% Probability 0.05 0.25 0.30 0.25 0.15 (2) Suppose Brightlight, Inc. was trading at $27.29 per share. At that time, it pays an annual dividend of $0.32 per share, and analysts have set a 1-year target price around $33.30 per share. What is the expected return on this stock? (3) What is the price for a stock with an expected dividend and price next year of $1 and $30, respectively? Use a 10% discount rate. (4) What is the current share price for a firm which has just paid a dividend of £2.5 and expects to increase its dividend by 3.5% every year, and the company has a required rate of return of 5%?
Give typing answer with explanation and conclusion A share of common stock is paying $3.50 per share, but the corporation only pays 40% of its earnings as cash dividends. The anticipated growth of this stock is 8%. Find the value of this stock if an investor wants a yield of 10%. If the stock is selling for $45, what is the expected yield?
An investor with a required return of 15 percent for very risky investments in common stock has analyzed three firms and must decide which, if any, to purchase. The information is as follows: Firm A B C Current earnings $ 1.60 $ 3.20 $ 6.80 Current dividend $ 2.10 $ 2.50 $ 6.40 Expected annual growth rate in 5 % 2 % -3 % dividends and earnings Current market price $ 24 $ 23 $ 41 What is the maximum price that the investor should pay for each stock based on the dividend-growth model? Round your answers to the nearest cent. Stock A: $ Stock B: $ Stock C: $ If the investor does buy stock A, what is the implied percentage return? Round your answer to two decimal places. % If the appropriate P/E ratio is 17, what is the maximum price the investor should pay for each stock? Round your answers to the nearest cent. Stock A: $ Stock B: $ Stock C: $ If the appropriate P/E ratio is 5, what is the maximum…
Anle Corporation has a current stock price of $21.99 and is expected to pay a dividend of $1.00 in one year. Its expected stock price right after paying that dividend is $23.92. a. What is Anle's equity cost of capital? b. How much of Anle's equity cost of capital is expected to be satisfied by dividend yield and how much by capital gain? a. What is Anle's equity cost of capital? Anle's equity cost of capital is ☐ %. (Round to two decimal places.)
Assume Evco, Inc. has a current stock price of $48.64 and will pay a $2.25 dividend in one year; its equity cost of capital is 10%. What price must you expect Evco stock to sell for immediately after the firm pays the dividend in one year to justify its current price? We can expect Evco stock to sell for $. (Round to the nearest cent.)
Assume Evco, Inc. has a current stock price of $49. 11 and will pay a $2.25 dividend in one year, its equity cost of capital is 18%. What price must you expect Evco stock to sell for immediately after the firm pays the dividend in one year to justify its current price? We can expect Evco stock to sell for $ ( Round to the nearest cent.)
Assume that shareholder's required rate of return (r) is 9%. Dr. Pepper is expected to pay a dividend of $2.00 per share (D1) next year. Moreover, investors expect dividends to grow at a constant rate of 4% per year (g). According to the Dividend Discount Model, what should be the current price per share of Dr. Pepper?
(Common stock valuation) Wayne, Inc.'s outstanding common stock is currently selling in the market for $24. Dividends of $3.01 per share were paid last year, return on equity is 21 percent, and its retention rate is 24 percent. a. What is the value of the stock to you, given a required rate of return of 19 percent? b. Should you purchase this stock? Question content area bottom Part 1 a. Given a required rate of return of 19 percent, the value of the stock to you is $enter your response here. (Round to the nearest cent.)
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