Only people who work thereWhen many people want to buy a stock, then the demand for the stock will 1 pointgo up. If demand goes up, then the stock price will most likely:Go downGo upNot changeDELL

Answered: Only people who work there When many…

Only people who work there When many people want to buy a stock, then the dem go up. If demand goes up, then the stock price will mc Go down

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

I am trying to get the 3M stock price using the Dividend Reinvestment Model. I think I should be using the growth rate based on calculating the % increase of dividends from previous years...is that correct or should I be using the dividend yield.....I don't think I should be using the dividend yield because that could change as the price goes up or down. It seems that 3M is way over-valued at the moment if I am doing this correctly.
2. (a) Explain fully the implications of the efficient-market hypothesis for financial managers? Does your answer depend on the degree of market efficiency? (b) Shares in the Beeblebrox company have a beta coefficient (ß) of 2, and a required rate of return of 22.5 per cent. If the risk-free rate is 3 per cent and the market risk-premium is 9.5 per cent, would you recommend investing in this company shares? Explain fully.
Even when the overall stock market goes up, why does the price of most individual stocks still go down?
An investor is considering purchasing a share of stock. Earnings are expected to be $6 per share and the price next year is expected to be $100. Suppose risk-free interest rates fall and the required rate of return decreases from 7% to 6%. Nothing else changes. What is new price the investor is wiling to pay for the stock? Answer in dollars and do not enter a $ sign. Round to two decimal places. please explain step by step
If the intrinsic value of a stock is below the current market price, over time we can expect buy orders to exceed sell orders, causing the price to rise buy and sell orders to be evenly matched, keeping the price at its current level sell orders to exceed buy orders, causing the price to rise sell orders to exceed buy orders, causing the price to fall buy orders to exceed sell orders, causing the price to fall
You are considering investing in a technology stock but are concerned that the required return may be too low. You will not purchase the stock if the required return is below 13%. Will you purchase the stock given the following information: The expected return on the market is 10%; T-bill rates are 5%; the stock’s β is 1.5.
Some investors use the Sharpe ratio as a way of comparing the benefits of owning shares of stock in a company to the risks. The Sharpe ratio of a stock is defined as the ratio of the difference between the mean return on the stock and the mean return on government bonds (called the risk-free rate rf ) to the SD of the returns on the stock. The mean return on government bonds is rf = 0.03% per day. The table below describes the daily return of three stocks. Date APPLE. TESLA GM 01/10/20 0.85% 4.46% 2.67% 02/10/20 -3.23% - 7.38% 0.26% 05/10/20 3.08% 2.55% 1.64% 06/10/20 -2.87% -2.75% -1.81% 07/10/20 1.70% 2.73% 4.01% 08/10/20 -0.10% 0.15% 1.87% 09/10/20 1.74% 1.90% -0.16% 12/10/20 6.35% 1.91% 0.16% 13/10/20 -2.65% 0.98% -1.06% 14/10/20 0.07% 3.28% -0.63% 15/10/20 -0.40% -2.69% 2.90% 16/10/20 -1.40% -2.05%…
If the expected rate of return on a stock is less than the required rate of return, The stock is experiencing supernormal growth. The stock should not be bought. The company is probably not trying to maximize its stock price. The stock is a good buy. Dividends are not being declared.
A stock is currently trading 50$. You want to buy it cheaper, placing a limit buy 47. Also, expecting that by year end the stock will rise to 70$ and then decline, you place a limit sell 70$.You were right about the direction of the stock price, it went directly to 75$. What is your current position?
Although investing all at once works best when stock prices are rising, dollar-cost averaging can be a good way to take advantage of a fluctuating market. Dollar-cost averaging is an investment strategy designed to reduce volatility in which securities are purchased in fixed dollar amounts at regular intervals regardless of what direction the market is moving. This strategy is also called the constant dollar plan. You are considering a hypothetical $1,200 investment in a media company's stock. Your choice is to invest the money all at once or dollar-cost average at the rate of $100 per month for one year. Assume that the company allows you to purchase "fractional" shares of its stock. (a) If you invested all of the money in January and bought the shares for $12 each, how many shares could you buy? shares (b) From the following chart of share prices, calculate the number of shares that would be purchased each month using dollar-cost averaging and the total shares for the year. Round to…
Answer the following a) When will the different DCF methods use the same discount rate? b) The cost of debt (ka) will change as the capital structure of a firm changes. Why or why not? c) Why does the cost of equity (k.) increase as the amount of debt in the capital structure of a firm increases? Why? d) Freebie Inc.'s common stock has a beta of 1.3. If the risk-free rate is 4.5% and the expected return on the market is 12%, what is its cost of equity capital? e) Why do branded food companies command the highest EBIT multiple (about 8) and transportation companies the lowest (about 3)? f) Should a firm use its cost of capital as a hurdle/discount rate to value all internal divisions? Why or why not? g) An option can have more than one source of value. Consider a mining company. The company can mine for ores today or wait another year (or more) to mine. What real options can you identify here? h) Do you consider dividend payments by the firm in calculating cash flows? Why or why not? i)…
(i) Stock XYZ, which traded for several months at a price of K72, and then declines to K65. if the stock eventually begins to increase in price, K72 is considered a resistance level because investors who bought originally at K72 will be eager to sell their shares as soon as they can break even on their investment. If everyone in the market believes in resistance levels, why do these beliefs not become self-fulfilling prophecies? (ii) What would happen to market efficiency if all investors attempted to follow a passive strategy?

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