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.)
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
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?

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