In March 2017, Amazon and Clorox reported nearly identical earnings per share, but the stock price of Amazon was more than six times higher than the Clorox stock price. The most likely explanation for that difference is that O Amazon has more shares of stock outstanding O Amazon is a riskier company O investors see better long-term prospects for Amazon O Clorox is bad for the environment

In March 2017, Amazon and Clorox reported nearly identical earnings per share, but the stock price of Amazon was more than six times higher than the Clorox stock price. The most likely explanation for that difference is that O Amazon has more shares of stock outstanding O Amazon is a riskier company O investors see better long-term prospects for Amazon O Clorox is bad for the environment

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

See similar textbooks

Similar questions

1) In early 2000, the Dow Jones Industrial Average rose above the 11,000 level. If the Dow were to fall to 7,000, who would gain the most: investors who had bought call options, investors who had bought put options, or inventors who had sold put options ? Who would be hurt the most ? 2) Suppose that you believe the fundamental value of Wal-Grey stock is about to rise from $50 to $100 because of its new management team. You have $20,000 that you can risk in the market, and you can think of four possible ways to profit: a)use your $20,000 to buy shares of Wal-Grey b)borrow (at a 6% interest rate) an additional $20,000 on margin to buy a total of $40,000 worth of Wal-Grey stock c) enter into a futures contract to buy 400 shares of Wal-Grey in one year for $21,200 (you can invest safetly for a year at a 6% interest rate) d)buy a call option (for every $1000 you spend on call options, you have the right to buy 100 shares of Wal-Grey at the current price of $50 per share.) Calculate how much…
Technicians consider the market as overbought and subject to a negative correction when more than Select one: a. 70% of the shares are selling above their 150-day average. b. 70% of the shares are selling above their 100-day average. C. 80% of the shares are selling above their 200-day average. d. 60% of the shares are selling above their 90-day average.
In early 2000, the Dow Jones Industrial Average rose above the 11,000 level. If the Dow were to fall to 7,000, who would gain the most: investors who had bought call options, investors who had bought put options, or inventors who had sold put options ? Who would be hurt the most ?
What would be concluded about the South African Mobile Phone sector between 2008 and 2011? A. The market was very depressed between the period 2008-2011 as cellular stocks remained below2008 prices through the period to 2011.B. The market was solid and prices were rising between 2008 and 2011C. Prices fell steadily but investors remained hopeful that the market was going to rebound in the nearto medium termD. The market crashed and plateaued between 2008 and 2011
28- Evidence on researching public information to identify mispriced companies shows that it is _______. Group of answer choices effective in earning abnormal returns in different market conditions effective as long as the market is semi-strong form efficient ineffective in weak-from market efficient ineffective as long as the market is semi-strong form efficient31- Based on the information in the table which of statements about total risk is correct? Stock Standard Deviation Beta W 37% 1.00 X 35% 1.50 Y 30% 0.85 Z 45% 1.30 Group of answer choices Stock Z has the greatest total risk because it has the largest standard deviation. . Stock X has the greatest total risk because it has the largest beta. Stock W because it has the greatest diversifiable risk. Stock Y has the lowest total risk because it has the lowest beta.
Empirical research on payout patterns in recent years indicates that Group of answer choices since 2000, firms are paying higher dividends and executing fewer stock repurchases after the Tech crash in March 2000, investors began to demand more dividends and firms obliged fewer firms are paying dividends since the Tech crash in March 2000 since 2000, firms are paying lower dividends and executing more stock repurchases
BFC is an agribusiness with a highly variable cash flow, but where the risks tend to be related to weather, commodity price cycles and other random factors not closely tied to the business cycle. Indeed, the correlation between the return on BFC equity and the return on the S&P 500 is just 0.3. However, the variance of the return on BFC’s equity is 12.25 times the variance of the return on the S&P 500. a) What is the CAPM beta coefficient for BFC equity? b) If the current risk-free rate is 3% and the expected return on the S&P 500 is 10.5%, what is the expected return on BFC equity according to CAPM?
a) Assume that the risk free rate of return is 6%, the market expected rate of return is 10%. The standard deviation of the market return is 4% while the covariance of return for security A and the market is 3%. Compute the required rate of return on Security A? b) The Managing Directors of three profitable listed companies discussed their companiesdividend policies at a business lunch.Company A has deliberately paid no dividends for the last five years.Company B always pays a low dividend per share (after adjusting for the general price index) and offer regular bonus issues.Company C always pays a dividend of 50% of earnings after taxation. Each Managing Director is convinced that his company policy is maximizing shareholders wealth.Required:Discuss the dividend policies used by the three companies.
Investors expect a company to announce a 9 percent decrease in earnings, but instead the company announces a 1 percent decrease. If the market is semistrong-form efficient, which of the following should happen? a. The stock’s price rises because the earnings decrease was less than expected. b. The stock’s price stays the same because earnings announcements have no effect if the market is semistrong-form efficient. c. The stock’s price decreases slightly because the company had a slight decrease in earnings.
Note: Don't use chat gpt..
A) Suppose that Facebook has earnings per share (expected next year) of $6.20 and that Facebook’s discount rate for equity is 12%. If Facebook is not expected to grow at all, what would Facebook’s share price be? Do not include the $ sign and answer to the nearest $0.01. B) Instead, Facebook is trading at $160 per share. What is the present value of Facebook’s growth opportunities per share? Do not include the $ sign and answer to the nearest $0.01.

Recommended textbooks for you

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS