Suppose the risk-free rate of return is 3.5 percent and the market risk premium is 7 percent. Stock U, which has a beta coefficient equal to 1.3, is currently selling for $37 per share. The company is expected to grow at a 4 percent rate forever, and the most recent dividend paid to stockholders was $2.75 per share. Is Stock U correctly priced? Explain. Do not round intermediate calculations. Round your answers to one decimal place. The required rate of return, that is %, is -Select- the expected rate of return, that is %, which means that -Select-
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- Suppose the risk-free rate of return is 3.5 percent and the market risk premium is 7 percent. Stock U, which has a beta coefficient equal to 1.3, is currently selling for $37 per share. The company is expected to grow at a 4 percent rate forever, and the most recent dividend paid to stockholders was $2.75 per share. Is Stock U correctly priced? Explain. Do not round intermediate calculations. Round your answers to one decimal place. The required rate of return, that is %, is -Select- the expected rate of return, that is %, which means that -Select-Suppose the risk-free rate of return is 4.5 percent and the market risk premium is 9 percent. Stock U, which has a beta coefficient equal to 1.2, is currently selling for $39 per share. The company is expected to grow at a 4 percent rate forever, and the most recent dividend paid to stockholders was $3.50 per share. Is Stock U correctly priced? Explain. Do not round intermediate calculations. Round your answers to one decimal place. The required rate of return, that is 14.7 %, is -Select- Hide Feedback -Select- greater than lower than equal to the expected rate of return, that is %, which means that the selling price is too highSuppose the risk-free rate of return is 4.5 percent and the market risk premium is 8 percent. Stock U, which has a beta coefficient equal to 1.3, is currently selling for $30 per share. The company is expected to grow at a 4 percent rate forever, and the most recent dividend paid to stockholders was $3.00 per share. Is Stock U correctly priced? Explain. Do not round intermediate calculations. Round your answers to one decimal place. The required rate of return, that is %, is the expected rate of return, that is %, which means that .
- The risk-free rate of return is 2 percent, and the expected return on the market is 6.1 percent. Stock A has a beta coefficient of 1.3, an earnings and dividend growth rate of 5 percent, and a current dividend of $1.50 a share. Do not round intermediate calculations. Round your answers to the nearest cent. a. What should be the market price of the stock? $ b. If the current market price of the stock is $81.00, what should you do? The stock -Select- ✓ be purchased. c. If the expected return on the market rises to 14.1 percent and the other variables remain constant, what will be the value of the stock? $ d. If the risk-free return rises to 5 percent and the return on the market rises to 14.3 percent, what will be the value of the stock? $ e. If the beta coefficient falls to 1.2 and the other variables remain constant, what will be the value of the stock? $ f. Explain why the stock's value changes in c through e. The increase in the return on the market -Select- ✓the required return and…Assume that the risk-free rate is 2.5% and the market risk premium is 8%. What is the required return for the overall stock market? Round your answer to one decimal place. ? % What is the required rate of return on a stock with a beta of 0.5? Round your answer to one decimal place. ? % The above is a two part question, therefore the second answer is determined based off the first answer provided. Please, please, please do provide both answers.a,b have been answered. provide answer for question c only
- Can you please give me correct answer the financial accounting question?Suppose the risk-free rate of return is 3.5 percent and the market risk premium is 7 percent. Stock U, which has a beta coefficient equal to 0.9, is currently selling for $30 per share. The company is expected to grow at a 4 percent rate forever, and the most recent dividend paid to stockholders was $1.75 per share. Is Stock U correctly priced? Explain.Suppose you observe the following situation: Probability of Rate of Return if State Occurs State of Economy Recession Normal Irrational exuberance State 0.25 0.55 0.20 Stock A -0.14 0.07 0.42 Stock B -0.12 0.07 0.22 a. Calculate the expected return on each stock. (Round the final answers to 2 decimal places.) Expected Return Stock A Stock B % % b. Assuming the capital asset pricing model holds and stock A's beta is greater than stock B's beta by 0.55, what is the expected market risk premium? (Do not round intermediate calculations. Round the final answer to 2 decimal places.) Expected market risk premium %
- Suppose that Do = $1.00 and the stock's last closing price is $26.25. It is expected that earnings and dividends will grow at a constant rate of g = 5.00% per year and that the stock's price will grow at this same rate. Let us assume that the stock is fairly priced, that is, it is in equilibrium, and the most appropriate required rate of return is rs = 9.00%. The dividend received in period 1 is D₁ = $1.00 × (1+0.0500) = $1.05 and the estimated intrinsic value in the same period is based on the constant growth model: P₁ = P² Using the same logic, compute the dividends, prices, and the present value of each of the dividends at the end of each period. Price (Dollars) $26.25 PV of dividend at 9.00% (Dollars) Dividend Period (Dollars) 0 $1.00 1.05 1 2 3 4 5 The dividend yield for period 1 is The capital gain yield expected during period 1 is 4.00% O 5.00% and it will 9.00% If it is forecasted that the total return equals 9.00% for the next 5 years, what is the forecasted total return out…The risk-free rate of return is 3 percent, and the expected return on the market is 7 percent. Stock A has a beta coefficient of 1.3, an earnings and dividend growth rate of 5 percent, and a current dividend of $2.10 a share. Do not round intermediate calculations. Round your answers to the nearest cent. What should be the market price of the stock? $ If the current market price of the stock is $91.00, what should you do? The stock -Select-shouldshould notItem 2 be purchased. If the expected return on the market rises to 13.1 percent and the other variables remain constant, what will be the value of the stock? $ If the risk-free return rises to 4.5 percent and the return on the market rises to 13.9 percent, what will be the value of the stock? $ If the beta coefficient falls to 1.2 and the other variables remain constant, what will be the value of the stock? $ Explain why the stock’s value changes in c through e. The increase in…The risk-free rate of return is 3 percent, and the expected return on the market is 7 percent. Stock A has a beta coefficient of 1.3, an earnings and dividend growth rate of 5 percent, and a current dividend of $2.10 a share. Do not round intermediate calculations. Round your answers to the nearest cent. What should be the market price of the stock? $ If the current market price of the stock is $91.00, what should you do? The stock -Select-shouldshould notItem 2 be purchased. If the expected return on the market rises to 13.1 percent and the other variables remain constant, what will be the value of the stock? $ If the risk-free return rises to 4.5 percent and the return on the market rises to 13.9 percent, what will be the value of the stock? $ If the beta coefficient falls to 1.2 and the other variables remain constant, what will be the value of the stock? $ Explain why the stock’s value changes in c through e. The increase in…