ESSEN.OF.INVESTMENTS+CONNECT
10th Edition
ISBN: 9781260361605
Author: Bodie
Publisher: MCG
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Chapter 13, Problem 14PS
A common stock pays an annual dividend per share of
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(TCO D) A stock pays an annual dividend of
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0. GM common stock pays a constant annual dividend $1/share forever and its stock price is $20. If risk free rate is 1% APR, what is the risk premium of the stock?
1. A stock is currently selling for $92.45 and is expected to sell for $109.07 in 1 year. If the company pays a dividend of $2.98 what is the stock's HPR?
2. A stock has a beta of 1.14. The risk-free rate is 1.809% and the market risk premium is 5%. What is the fair return on the stock?
Chapter 13 Solutions
ESSEN.OF.INVESTMENTS+CONNECT
Ch. 13 - Prob. 1PSCh. 13 - Prob. 2PSCh. 13 - If a security is underpriced [Lew intrinsic value...Ch. 13 - Deployment Specialists pays a current (annual)...Ch. 13 - Jand, Inc, currently pays a dividend of 1.22,...Ch. 13 - A firm pays a current dividend of 1, which is...Ch. 13 - Tri-coat Paints has a current market value of 41...Ch. 13 - A firm has current assets that could be sold for...Ch. 13 - Prob. 9PSCh. 13 - Miltmar Corporation will pay a year-end dividend...
Ch. 13 - Sisters Corp. expects to earn 6 per share next...Ch. 13 - Prob. 12PSCh. 13 - Prob. 13PSCh. 13 - A common stock pays an annual dividend per share...Ch. 13 - The risk-free rate of return is 5 , the required...Ch. 13 - Explain why the following statements are...Ch. 13 - a. Computer stocks currently provide an expected...Ch. 13 - Prob. 18PSCh. 13 - a. MF Corp. has an ROE of 16 and a plowback ratio...Ch. 13 - The market consensus is that Analog Electronic...Ch. 13 - The FE Corporation’s dividends per share are...Ch. 13 - The stock of Negro Corporation is currently...Ch. 13 - The risk-free rate of return is 8 , the expected...Ch. 13 - Prob. 24PSCh. 13 - Chiptech, Inc., is an established computer Chip...Ch. 13 - Prob. 1CPCh. 13 - 2. Phoebe Black‘s investment club wants to buy the...Ch. 13 - Prob. 3CPCh. 13 - Prob. 4CPCh. 13 - Prob. 5CPCh. 13 - Prob. 6CPCh. 13 - Prob. 7CPCh. 13 - Prob. 8CPCh. 13 - 9. To continue with Sundanci, Abbey Naylor. CFA,...
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- Crisp Cookware’s common stock is expected to pay a dividend of $3 a share at the end of this year (D1 = $3.00); its beta is 0.8. The risk-free rate is 5.2%, and the market risk premium is 6%. The dividend is expected to grow at some constant rate g, and the stock currently sells for $40 a share. Assuming the market is in equilibrium, what does the market believe will be the stock’s price at the end of 3 years (i.e., what is )?arrow_forwardRequired: A common stock pays an annual dividend per share of $2.10. The risk-free rate is 7% and the risk premium for this stock is 4%. If the annual dividend is expected to remain at $2.10, what is the value of the stock? (Round your answer to 2 decimal places.) Stock valuearrow_forward3. What is the intrinsic value of a share of stock if expected dividends are $8/share and the expected price year is $90/share? Assume a discount rate of 10%. What is the expected return and what should be the decision from an investor?. in 1arrow_forward
- Suppose a stock pays 2.5 OMR annual dividends and the rate of return required by investors is 10 percent . calculate the fair value of the stockarrow_forwardX-Terra stocks just paid a dividend of $2.00 per share (i.e., D0=2.0). If the expected longrun growth rate for this stock is 5%, and if investors require 19% return, what is the price of the stock?arrow_forwardstock X just paid a dividend of $1 and is expected to pay a $3 dividend per year for the foreseeable future. Given that the required rate of return on stock X is 5%, what would be the fair price of stock X 3 year from today? 1. $3.86 2. 4 3. 3.47 4. 4.86 5. 60arrow_forward
- A preferred stock pays a dividend of $2.3. If the required return is 8%, what is the value of the stock? Answer:arrow_forwardA stock is expected to pay a dividend of $3.00 per share in year 1. The stock price after one year is expected to be $80 per share. The equity cost of capital is 10%, whereas the risk-free rate is 2%. What is the current stock price? O $72.73 $75.45 $81.37 $830.00arrow_forward1. A share of stock of company is now selling for 23.5 lei. A financial analyst summarizes the uncertainty about the rate of return on the stock by specifying three possible scenarios: Scenario Probability 0.35 End-of-year price 35 27 Annual dividend 4.4 II 0.3 4 15 Compute the expected return and risk on this security. III 0.35 4arrow_forward
- An equity share costing Rs.100/- pays no dividends. The possible prices that the share might sell for at year end and, the respective probability are as follows: 一T Year end Price (Rs) Probability 90.00 0.1 100.00 0.2 105.00 0.4 110.00 0.2 120.00 0.1 a) What is the expected return of the share? b) What is the standard deviation of the share?arrow_forwardff2arrow_forwardThe preferred stock of Placer Corp currently sells for OMR44.44 per share. The annual dividend of OMR4 is fixed. Assuming a constant dividend forever, what is the rate of return on this stock? Select one: a. 9.0% O b.11.0% О с 8.0% O d. 10.0% O e.7.0%arrow_forward
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