Don't use ai given answer accounting questions 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%.

To determine whether this is a good investment, we need to calculate the holding period return (HPR)…

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.
You have just purchased a share of stock for $21.34. The company is expected to pay a dividend of $0.54 per share in exactly one year. If you want to earn a 9.4% 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.)
You are contemplating the purchase of stock for Tenet Healthcare based on the recommendation of a financial advisor. The stock just recently paid a per share dividend of $2.00 and the dividend is expected to grow at a constant rate of 5% per year. If the required market rate of return on Tenet Healthcare stock is 12%: What is the expected dividend amount per share over the next three years? What is the stock's current estimated value and for each of the next three consecutive years? Estimate the expected divided yield, capital gains yield, and expected total return/yield for each of the next three years.
You are considering the purchase of a stock that yesterday announced EPS of $6.24. You feel that earnings will grow at 23% for the next three years. After that growth in earnings should level-off to 3% per year into the future. You require a return of 13%. Based on these assumptions, what would you pay for the stock today? $105.12 $141.83 $95.59 $119.50
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.)
Suppose that one year ago you bought 100 shares of SodaCo for $10 per share with the expectation of receiving a perpetual dividend of $1 per share. What was your expected annual percentage return on this investment? Today,SodaCo announces that it will increase its annual dividend to $2 per share.Upon announcement, the stock price rises to $20. If you then sell the stock,what percentage returnwould you realize on your investment?What annualreturnwould the buyer of your stock expect in the future? Why is there sucha difference in returns?
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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