Personal Finance
Personal Finance
7th Edition
ISBN: 9780134989969
Author: Madura, Jeff
Publisher: Pearson,
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Chapter 17, Problem 24RQ
Summary Introduction

To discuss: Diversification among mutual funds and strategies which makes diversification more effective and discuss mutual fund supermarket.

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(Do not use Excel) I like to see the work of how to solve the problem. The investment banking firm of Doots Incorporated. will use a dividend valuation model to appraise the shares of the Straight Fence Corporation. Dividends (D1) at the end of the current year will be $2.70. The growth rate (g) is 7 percent and the discount rate (Ke) is 13 percent.  a. What should be the price of the stock to the public?  b. If there is a 8 percent total underwriting spread on the stock, how much will the issuing corporation receive?  c. If the issuing corporation requires a net price of $38.30 (proceeds to the corporation) and there is a 7 percent underwriting spread, what should be the price of the stock to the public? (Round to two places to the right of the decimal point.)
California Homes Associates is about to go public. The investment banking firm of Dillon and Associates is attempting to price the issue. The building industry generally trades at a 25 percent discount below the P/E ratio on the Standard & Poor’s 500 Stock Index. Assume that index currently has a P/E ratio of 30. The firm can be compared to the building industry as follows:                                                                                    CA Homes                                       Building Industry Growth rate in earnings per share ............... 16%                                                             13% Consistency of performance ...................... Increased earnings                                        Increased earnings                                                                      3 out of 5 years                                              2 out of 5 years  Debt to total assets.................................... 64%…
What is the Biblical perspective on the Capital Markets, and what is the relationship between them? How do they research the Biblical perspective on the Capital Markets? Could you help explain how research will fulfill this requirement and integrate a Christian worldview?
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