Use the following data to answer the questions that follow.CompanyBetaSavoy Corp.0.84Hokie Industries1.36Alison Records1.94Expo Enterprises0.491.00S&P 500a. If the S&P 500 goes up by 20.78 percent, how much should the stocks of Savoy, Hokie, Alison, and Expo change in value?b. If the stock market drops by 9.67 percent, which one of these stocks should outperform the others? Why?a. If the S&P 500 goes up by 20.78 percent, the stock of Savoy would change in value by %. (Round to two decimal places.)

Beta concept can be useful in the capital asset pricing model (CAPM). Beta is a measure of…

Answered: Use the following data to answer the…

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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I needed help finding what the formula is to find the PV Factor.
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please respond to both questions. Stocks A and B have a dividend of $3. Stock A’s dividends are expected to grow at 3% forever. Dividends for Stock Dividends for Stock B are expected to remain at $3 forever. All else equal, which stock should have a higher price? A B A=B Not sure Company Dividend Yield Required Return Price Market Capitalization A 7% 10% $100 $1,000,000 B 7% 11% $10 $10,000,000 Which stock has the higher capital gain's yield? A B A=B Not sure
Gabriel Industries stock has a beta of 1.35. The company just paid a dividend of $.85, and the dividends are expected to grow at 5 percent. The expected return on the market is 11.5 percent, and Treasury bills are yielding 5 percent. The most recent stock price is $83.50. a. Calculate the cost of equity using the dividend growth model method. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. Calculate the cost of equity using the SML method. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
If you look at stock prices over any year, you will find a high and low stock price for the year. Instead of a single benchmark PE ratio, we now have a high and low PE ratio for each year. We can use these ratios to calculate a high and a low stock price for the next year. Suppose we have the following information on a particular company: Year 1 Year 2 Year 3 Year 4 High $87.93 $100.35 $121.89 $133.60 Low price 69.85 83.19 79.99 110.18 EPS 6.54 8.96 8.62 10.21 Earnings are expected to grow at 5.5 percent over the next year. a. What is the high target stock price over the next year? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. What is the low target stock price over the next year? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) a. High target price b. Low target price price
The share price of a company is shs100. Its expected next dividend is shs3. The dividend and share price growth rate is expected to be 4% p.a. The risk-free interest rate is 5% p.a. The share has a beta of 0.8 and the expected yield on the stock market as a whole is 8% p.a. Use the Gordon Growth Model and the Security Market Line to form an opinion as to whether the share is correctly priced.
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Company Z just paid a dividend of D0 = $1.30. Analysts expect the company's dividend to grow by 20% this year, by 10% in Year 2, and at a constant rate of 4% in Year 3 and thereafter. The required return on this stock is 9%. What is the best estimate of the stock's current market value? Group of answer choices 35.69 37.86 36.21 32.92 31.27
Your assignment here is to value Walmart Inc.'s (WMT’s) stock. A bit oddly, WMT is not expected to pay a dividend at t = 1. WMT’s next dividend (i.e., the dividend at t = 2) is expected to be $3.00/share. Across years 3 and 4 and 5, dividends will grow by 8%/year. After that, dividends are projected to grow at a constant rate of 3% forever. Walmart has a debt-to-equity ratio (in market-value terms) of 1.0. The yield to maturity on WMT's bonds averages 4% and the company's tax rate is 30%. If the risk-free rate is 3.1%, the expected return on the market is 9.1%, and WMT's equity beta is 1.10, calculate a fair price at which the stock should sell for today, based on a discounted valuation of its projected dividends.
Start with the partial model in the file Ch11 P18 Build a Model.xlsx. The stock of Gao Computing sells for $70, and last year's dividend was $4.38. Security analysts are projecting that the common dividend will grow at a rate of 7% a year. A flotation cost of 11% would be required to issue new common stock. Gao's preferred stock sells for $21.74, pays a dividend of $2.20 per share, and new preferred stock could be sold with a flotation cost of 8%. The firm has outstanding bonds with 20 years to maturity, a 9% annual coupon rate, semiannual payments, and $1,000 par value. The bonds are trading at $839.54. The tax rate is 25%. The market risk premium is 6%, the risk-free rate is 6.5%, and Gao's beta is 1.2. In its cost-of-capital calculations, Gao uses a target capital structure with 40% debt, 10% preferred stock, and 50% common equity. The data has been collected in the Microsoft Excel file below. Download the spreadsheet and perform the required analysis to answer the questions below.…
Compare the year end price of Dollar Inc. and Target Corp. As an investor, what would these two charts tell you, and who would you choose to invest in and why?
Use the data below to construct the advance/decline line and Arms ratio for the market. Volume is in thousands of shares. (Input all amounts as positive values. Do not round intermediate calculations. Round your "Arms Ratio" answers to 3 decimal places.) StocksAdvancing AdvancingVolume StocksDeclining DecliningVolume Monday 1,936 876,951 333 126,645 Tuesday 2,641 509,531 809 217,135 Wednesday 1,340 519,132 1,188 499,845 Thursday 2,159 942,526 840 314,846 Friday 2,033 596,483 1,205 381,953

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