Projections for a firm whose stock you wish to value:Years 1-6EPSPayout RatioStock's beta isYTM on T-bond isStock premium is1.260.271. What is the stock's value?A Between 15.00 and 23.00B Between 23.00 and 27.00C Between 27.00 and 31.00D Between 31.00 and 40.000.64.3%5.0%Years 7-134.970.36Discount the projected dividends at the required rate of return to estimatethe stock's value. Only use years 1-24 in your computations.Years 14 - 246.910.422. Please go back to the original story. Suppose the stock becomes less riskyfrom an investor's view. For instance, suppose its beta is now 0.80If there are 90,000,000 shares outstanding, what is the impacton the market value of the firm? Hint: first find the new stock price,then compute how it changed, and multiply that change by thenumber of shares outstanding.A up between 0 and 160,000,000B up between 160,000,000 and 500,000,000C down between 0 and 160,000,000D down between 160,000,000 and 500,000,000

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Answered: Projections for a firm whose stock you…

Fundamentals of Financial Management, Concise Edition (MindTap Course List)

9th Edition

ISBN:9781305635937

Author:Eugene F. Brigham, Joel F. Houston

Publisher:Eugene F. Brigham, Joel F. Houston

Chapter8: Risk And Rates Of Return

Section: Chapter Questions

Problem 22SP

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Assume these are the stock market and Treasury bill returns for a 5-year period: T-Bill Return Year Stock Market Return (8) (8) 2016 32.50 0.07 2017 11.80 0.07 2018 -2.40 0.07 2019 13.70 0.25 2020 22.40 0.27 Required: a. What was the risk premium on common stock in each year? b. What was the average risk premium? c. What was the standard deviation of the risk premium? (Ignore that the estimation is from a sample of data.) Complete this question by entering your answers in the tabs below. Required A Required B Required C What was the risk premium on common stock in each year? Note: Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places. Negative values should be entered with a negative sign.. Year Risk Premium 2016 % 2017 % 2018 % 2019 % 2020 %
Bhupatbhai
Assume these are the stock market and Treasury bill returns for a 5-year period: Year Stock Market Return (%) T-Bill Return (%) 2016 13.0 0.2 2017 21.0 0.8 2018 -6.2 1.8 2019 29.8 2.1 2020 20.6 0.4 Required: What was the risk premium on common stock in each year? What was the average risk premium? What was the standard deviation of the risk premium? (Ignore that the estimation is from a sample of data.)-- expressed in % (NOTE: 11.31% & 13.68% is incorrect)
Assume these are the stock market and Treasury bill returns for a 5-year period: Year Stock Market Return (%) T-Bill Return (%) 2016 13.0 0.2 2017 21.0 0.8 2018 -6.2 1.8 2019 29.8 2.1 2020 20.6 0.4 Required: What was the risk premium on common stock in each year? What was the average risk premium? What was the standard deviation of the risk premium? (Ignore that the estimation is from a sample of data.)
Questions 6 The performance (%) of one stock and one bond over the past four years is as follows: Return Return Return in 2018 Return in 2019 Return in 2020 Average standard in 2017 return deviation Stock Bond 20 -30 25 15 25.33 1 3 3.75 ? a) What is the average return of the stock? b) What is the standard deviation of the bond? c) What are the two lessons from the capital market history?
The annual returns of a stock and the risk-free interest rate are given as follows: Year 2010 2011 2012 2013 2014 Stock Return % 5% -9% 6% 15% Rf 2% 1% 2% 0.5% 1% Calculate the arithmetic average stock return. 7+5+-9+6+15= 17/5= 3.4 Calculate the geometric average stock return. G=[(1+7%)(1+5%)(1+-9%)(1+6%)(1+15%)]^1/5-1 = 1.246387^1/5-1=4.5% Calculate the standard deviation of stock returns (could be done by Excel). Calculate the risk premium of the stock. Calculate the standard deviation of the excess returns. Calculate the Sharpe ratio of the stock.
Using the table below, Compute the convexity measure (in years) for bond 2 Bond 1 Bond 2 Coupon Yield to maturity Maturity (in years) Par value 6% 7% 6% 6% 4 $100 $100 $100 $108 Price O A. 14.763 12.652 OC. 13.312 OD. 13.927
Subject:- finance
Consider the following annual closing prices of stock A, values of market index (S&P 500) and Treasury bills rate. A B C с D Date Stock A Prices (in $) Market Index Value Risk Free Rate (in %) 2 Period 1 119 3 Period 2 100 11829 11843 9639 88 131 12854 9580 11640 8469 11412 9115 10682 NOSAWNH 1 4 Period 3 Period 4 6 Period 5 7 Period 6 8 Period 7 9 Period 8 10 Period 9 11 Period 10 12 O 1.1 13 What is the value of CAPM beta for stock A? O 1.4666 O 1.8333 O2.0533 82 113 O 0.3666 65 109 95 113 1.48 1.76 1.64 1.2 1.43 1.36 1.3 1.72 1.71 1.77
Assume the below information to answer the following question. Last Price A. 14.2% B. 18.9% OC. 16.8% OD. 11.0% Company Coupon Maturity Ford (F) 11.0 July 31, 2014 Based on the above table, what is the last yield for this bond? Last Yield 65.50 ? EST EST VOL. Spread UST (000s) 104 10 5,100 }
Assume these are the stock market and Treasury bill returns for a 5-year period: Year Stock Market Return (%) T-Bill Return (%) 2013 35.90 0.21 2014 15.20 0.21 2015 -5.10 0.21 2016 16.90 0.08 2017 25.90 0.10 a. What was the risk premium on common stock in each year? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.) Year Risk Premium 2013 % 2014 % 2015 % 2016 % 2017 % b. What was the average risk premium? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) c. What was the standard deviation of the risk premium? (Ignore that the estimation is from a sample of data.) (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)
8. The beginning share price for a security over a three-year period was $100. Subsequent year-end prices were $124, $116 and $128. The arithmetic average annual rate of return and the geometric average annual rate of return for this stock was a. 9.30% and 8.78% respectively. b. 9.30% and 7.89% respectively. c. 9.30% and 7.03% respectively. d. 9.30% and 6.37% respectively.

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