Provide solution this financial accounting question The stock of UCD has just been sold in an initial public offering ata price of $165 per share. One week after this offering, the stockhas risen to $195. You believe the stock will rise to $225 over thecoming year. You expect UCD to pay a $15 dividend during thecoming year. If you require a rate of return of 30%, do you believethis is a good investment at the current price of $195?a. Yes, the holding period return is 33.33% greater than 30%.b. No, the holding period return is 25.64% less than 30%.c. No, the holding period return is 23.08% less than 30%.d. No, the holding period return is 15.38% less than 30%.

Step 1: Define Holding Period Return (HPR)An investment's holding period return refers to the total…

Answered: The stock of UCD has just been sold in…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter7: Common Stock: Characteristics, Valuation, And Issuance

Section: Chapter Questions

Problem 23P

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You are interested in buying a stock today, which sells for $95 per share. You believe that the right time to sell this stock is three years later. During your investment, you expect to receive the following dividends: D1 (dividend at the end of year 1) = $4, D2 = $4.50, and D3 = $5. If you required rate of return is 11% per year, what is the expected stock price at Year 3? (Hint: Your investment horizon is three years) O $112.25 $115.00 O $113.75 $110.50 $116.25
You have just purchased a share of stock for $20.29.The company is expected to pay a dividend of $0.52 per share in exactly one year. If you want to earn a 9.1% return on your investment, what price do you need if you expect to sell the share immediately after it pays the dividend? The price one year from now should be $_______.(Round to the nearest cent.)
Suppose you are thinking of purchasing the Luna Co.’s common stock today. If you expect Luna to pay $2.5, $2.625, $2.73, and $2.81 dividends at the end of year one, two, three, and four respectively and you believe that you can sell the stock for $40.97 at the end of year four. If you required return on this investment is 9%, how much will you be willing to pay for the stock today?
Suppose you are thinking of purchasing the Moore Co.’s common stock today. If you expect Moore to pay $2.5, $2.625, $2.73, and $2.81 dividends at the end of year one, two, three, and four respectively and you believe that you can sell the stock for $40.97 at the end of year four. If you required return on this investment is 9%, how much will you be willing to pay for the stock today?
Crate stock is expected to pay dividends of $1 per share one year from today, and $1.5 per share in year two, and you estimate the value of the stock at the end of year two will be $17.50. What is the most you would be willing to pay for the stock today, if you plan to sell it in two years and if you require a 10% return? O $20.21 O $16.75 $16.90 $16.61.
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You are considering two investment alternatives. The first is a stock that pays quarterly dividends of $0.45 per share and is trading at $26.16 per share; you expect to sell the stock in six months for $30.09. The second is a stock that pays quarterly dividends of $0.61 per share and is trading at $37.12 per share; you expect to sell the stock in one year for $38.65. Which stock will provide the better annualized holding period return? The 1-year HPR for the first stock is%. (Enter as a percentage and round to two decimal places.)
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Your broker has recommended that you purchase stock in ZZZ-Best, Inc. She estimates that the 1-year target price is $70, and ZZZ-Best consistently pays an annual dividend of $8. Based on your analysis, you estimate that the stock has a required rate of 18%. What is the intrinsic value of this stock? O $64.43 O $68.73 O $67.35 O $61.86 O $66.10
You expect a stock to pay annual dividends of $1.39, $1.16, and $1.87 in each of the next three years, with the first dividend payment occurring one year from today. You also expect a stock price of $33.19 immediately after the stock pays the third annual dividend (i.e., exactly three years from today). If the stock's required rate of return is 6%, what is a fair price for the stock today? Round your answer to the nearest penny: Type your answer.....

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