Problem 7-21 Constant-Growth Model (LO2)Here are data on two stocks, both of which have discount rates of 14%:Return on equityEarnings per shareStock A14%$ 1.50Stock B10%$ 1.40Dividends per share$ 1.20$ 1.20a. What is the dividend payout ratio for each firm?Note: Enter your answers as a percent rounded to 2 decimal places.Stock AStock BDividend payout ratios80.00 %85.71 %b. What is the expected dividend growth rate for each stock?Note: Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.Stock AStock BExpected dividend growth rates%%c. What is the value of each stock?Note: Do not round intermediate calculations. Round your answers to 2 decimal places.Stock AStock BStock price

Stock AReturn on equity (r) = 14% or 0.14EPS = $1.50Current Dividend (D0) = $1.20Discount rate (k) =…

Here are data on two stocks, both of which have discount rates of 14%: Return on equity Earnings per share Stock A 14% $ 1.50 Stock B 10% $ 1.40 Dividends per share $ 1.20 $ 1.20 a. What is the dividend payout ratio for each firm? Note: Enter your answers as a percent rounded to 2 decimal places. Stock A Dividend payout ratios 80.00 % Stock B 85.71% b. What is the expected dividend growth rate for each stock? Note: Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places. Stock A Stock B Expected dividend growth rates % c. What is the value of each stock? Note: Do not round intermediate calculations. Round your answers to 2 decimal places. Stock A Stock B Stock price _

Here are data on two stocks, both of which have discount rates of 14%: Return on equity Earnings per share Stock A 14% $ 1.50 Stock B 10% $ 1.40 Dividends per share $ 1.20 $ 1.20 a. What is the dividend payout ratio for each firm? Note: Enter your answers as a percent rounded to 2 decimal places. Stock A Dividend payout ratios 80.00 % Stock B 85.71% b. What is the expected dividend growth rate for each stock? Note: Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places. Stock A Stock B Expected dividend growth rates % c. What is the value of each stock? Note: Do not round intermediate calculations. Round your answers to 2 decimal places. Stock A Stock B Stock price _

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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In 20X4, P Co declared dividends totaling $.52 per common share when earnings per share were $1.31 and its market price was 40 7/16. In 20X3, its dividends totaled $.46 per share, its earnings per share were $1.36 and its market price was 34 11/16. What was the computed dividend yield ratio for 20X4 and 20X3 respectively? (Rounded to nearest 1 decimal) Multiple Choice 1.8% and 1.9% 1.3% and 1.3% 1.7% and 1.3% 2.1% and 2.3%
Suppose a stock had an initial price of $103 per share, paid a dividend of $2.55 per share during the year, and had an ending share price of $115. Compute the percentage total return. (Do not round intermediate calculations. Round the final answer to 2 decimal places.) Percentage of total return %
Suppose a stock had an initial price of $50 per share, paid a dividend of $1.05 per share during the year, and had an ending share price of $37. Compute the percentage total return. Enter the answer in 4 decimals e.g. 0.1234.
An index consists of the following securities. What is the value-weighted index return? Value-weighted Stock Shares Outstanding Beginning Share Price Ending Share Price L 4,000 $ 18 $ 26 M 3,000 $ 35 $ 41 Multiple Choice 22.03% 22.85% 25.25% 28.25% 30.00%
Consider the following stock price and shares outstanding information. PWIyear 1: PWIYear 2: a. Compute the beginning and ending values for a price-weighted index and a market-value-weighted index. Assume a base value of 100 and Year 1 as the base period. Do not round intermediate calculations. Round answers to two decimal places. VWIyear 1: VWIYear 2: DECEMBER 31, Year 2 Shares DECEMBER 31, Year 1 Shares Outstanding Price Outstanding 107,000,000 $29 107,000,000 2,500,000 48 29,000,000 43 5,000,000² 29,000,000 % % Price $22 70 39 b. Compute the percentage change in the value of each index during the year. Do not round intermediate calculations. Round your answers to two decimal places. Percentage change in PWI: % Stock K Stock M Stock R aStock split two-for-one during the year. Percentage change in VWI: c. Compute the percentage change for an unweighted index assuming $1,000 is invested in each stock. Do not round intermediate calculations. Round your answer to two decimal places.
A stock has had the following year-end prices and dividends: Year Price Dividend 1 $ 65.13 — 2 72.00 $ .76 3 77.80 .81 4 64.07 .87 5 74.71 .96 6 87.75 1.03 What are the arithmetic and geometric returns for the stock? (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)
b) Cohen and Company Limited (CAC) preferred stocks on the market, each with a par value of $90. The stocks have dividends and yield as presented in has three the table below. Name Dividends Yield Series X 8.0% 10.5% Series Y 7.2% 9.8% Series Z 6.5% 11.1% Calculate the price for each of the three preferred stocks?
Suppose a market consists of four stocks. The number of shares outstanding for each stock as well as the stock prices in two consecutive days are as follows: Stock A Stock B Stock C Stock D Shares outstanding 200 1000 400 3000 I $5 $30 $100 $40 Ро $15 $25 $80 $50 a) Compute the percentage increase in the price-weighted index for this market. b) Compute the percentage increase in the value-weighted index for this market. P₁
2. A certain company gave out P 25 dividend per share for its common stock. The market value of the stock is P 92. Determine the stock yield ratio.
8.
In each case in the following table,attached, how many dollars of preferred dividends per share must be paid to preferred stockholders before common stock dividends are paid?
Using the data in the following table, estimate the average return and volatility for each stock. (Click on the following icon in order to copy its contents into a spreadsheet) Realized Returns Year 2008 2009 2010 2011 2012 2013 Stock A -1% 13% 3% -3% 5% 11% Stock B 17% 20% 11% -3% -3% 32% The return of stock A is%. (Round to two decimal places.) CUIS

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