Looking up a stock tip on Yahoo Finance that you received from your friend Lenny, you came across Cisco Incorporated. Reviewing their financials, you see that they paid $2.2 million in common stock dividends with only 10 million shares outstanding. Out of the $35 million in stockholder's equity $4.8 million was retained earnings. You feel that the price of the stock in the market today is reasonable at $9.00 per share. But Lenny always told you that you needed to figure out these four ratios before investing in any stock. So, you need to calculate: A) P/E Ratio. B) Book Value Per Share. C) Earnings Per Share. D) Market to Book Ratio.

Looking up a stock tip on Yahoo Finance that you received from your friend Lenny, you came across Cisco Incorporated. Reviewing their financials, you see that they paid $2.2 million in common stock dividends with only 10 million shares outstanding. Out of the $35 million in stockholder's equity $4.8 million was retained earnings. You feel that the price of the stock in the market today is reasonable at $9.00 per share. But Lenny always told you that you needed to figure out these four ratios before investing in any stock. So, you need to calculate: A) P/E Ratio. B) Book Value Per Share. C) Earnings Per Share. D) Market to Book Ratio.

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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Similar questions

1. A student remarks: "135,000,000 shares of General Electric were sold yes- terday on the New York Stock Exchange, at an average price of $25 per share. That means General Electric just received over $3.4 billion from investors.” Briefly explain whether you agree with the student's analysis.
Your friend told you that she invested $1,000 in a portfolio of large-company stocks 5 years ago and also reinvested the dividends. Herinvestment grew to $3,456 as at today. Had she invested that same amount in a Government of Grenada bond she would have received $2,500even if she reinvested the 10 percent coupons paid on the bonds. REQUIRED How can you avoid the value of your stock from going down?
Amarindo, Inc. (AMR), is a newly public firm with 11.0 million shares outstanding. You are doing a valuation analysis of AMR. You estimate its free cash flow in the coming year to be $15.41 million, and you expect the firm's free cash flows to grow by 3.8% per year in subsequent years. Because the firm has only been listed on the stock exchange for a short time, you do not have an accurate assessment of AMR's equity beta. However, you do have beta data for UAL, another firm in the same industry: lower debt-equity ratio of 0.45, which is expected to remain stable, and its debt is risk free. AMR's corporate tax rate is 20%, the risk-free rate is 5.3%, and the expected return on the market portfolio is 10.7%. AMR has a much a. Estimate AMR's equity cost of capital. b. Estimate AMR's share price. a. Estimate AMR's equity cost of capital. The equity cost of capital is 21.16%. (Round to two decimal places.) Data table SID (Click on the following icon in order to copy its contents into a…
2) You bought 1500 shares of Microsoft one year ago for $120 per share. Microsoft paid a $2 (per-share) dividend last year. The current stock price is $105. a. What rate of return did you earn from your Microsoft investment? b. Ifinflation rate over the last year was 4%, what is your real rate of return? c. Rather than buying 1500 Microsoft shares a year ago, you instead sold them short. What is the rate of return from your Microsoft trade now? Focu MacBook Pro A
Your corporation has declared a cash dividend of $5.00 per share. Before the cash dividend the stock was selling for $60.00 per share. When the stock goes ex-dividend what will the price per share be? Please show your calculations in the space provided.What would the ex-dividend price per share be?
A big pharmaceutical company, DRIg, has just announced a potential cure for cancer. The stock price increased from $5 to $138 in one day. A friend calls to tell you that he owns DRIg. You proudly reply that you do, too. Since you have been friends for some time, you know that he holds the market, as do you, and so you both are invested in this stock. Both of you care only about expected return and volatility. The risk-free rate is 3%, quoted as an APR based on a 365-day year. DRIg made up 0.82% of the market portfolio before the news announcement. a. On the announcement your overall wealth went up by 1.4% (assume all other price changes cancelled out so that without DRIg, the market return would have been zero). How is your wealth invested? b. Your friend's wealth went up by 2.5%. How is his wealth invested?
Yesterday at the market close, the stock of Kevin Spellman, Inc. was trading at $100 per share and there were 500,000 shares outstanding. This morning before the market opened, Kevin Spellman, Inc. announced that it was doing a 5:1 stock split. Under the efficient market hypothesis and with no new information, what will be the new stock price in dollars per share?
After learning how to value a stock in his Corporate Finance class, Mark Stark decided to put his knowledge into practice and use the constant growth rate model to value El Tomate Feliz Co. He found that the company was severely undervalued. The stock was trading at $50 per share, but he valued it at $120 per share. Mark complained: “I thought that El Tomate Feliz was a steal and bought as many shares as I could, but the price didn’t go up. I have waited a year, and the price has not changed that much.” Lower necessary rate of return - Mark would have estimated his cost of equity or required rate of return at lower levels, resulting in better intrinsic values as a result of the lower discount rate. What does this mean,” …Mark would have estimated his cost of equity or required rate of return at lower levels"
(Calculating rates of return) Blaxo Balloons manufactures and distributes birthday balloons. At the beginning of the year Blaxo's common stock was selling for $17.95 but by year end it was only $16.91. If the firm paid a total cash dividend of $1.76 during the year, what rate of return would you have earned if you had purchased the stock exactly one year ago? What would your rate of return have been if the firm had paid no cash dividend? The rate of return you would have earned is %. (Round to two decimal places.)
You are trying to estimate the intrinsic value of the shares of Flying High Ltd, a manufacturer of unmanned aerial vehicles, or drones. The company is headquartered in Melbourne, and sells its drones throughout Australia and New Zealand. It is a public company, but is not yet listed on the stock exchange. There are 30,000 shares outstanding. The most recent dividend was $2.6. The required rate of return for equity is 18.97%. Book value of equity, per share, as at 31 December 2021 was $25.97. You have come up with the following forecasts: - Earnings are expected to grow at 3.9% in perpetuity. - The firm's Return on Equity is expected to remain constant at 23.46%. What is the estimated value of the shares using a Residual Income Discount Model? a. $33.71 b. $32.51 c. $31.68 d. $32.00
Eight months ago, you purchased 400 shares of AAA stock for $46.40 a Share. The company pays quarterly dividends of $1.05 a share. Today, you sold all of Your shares are for $48.30 a share. What is your total percentage return on this Investment? What is your total dollar return on this investment? Briefly discuss.
Last year, you purchased 510 shares of Forever, Incorporated, stock at a price of $45.44 per share. You received $714 in dividends and a total of $25,556 when you sold the stock. What was the capital gains yield on this stock?

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