Homework Answers
2]
a]
Investors price = next year dividend / (required return - growth rate).
next year dividend = last quarter dividend * 4 * (1 + growth rate)
next year dividend = $0.40 * 4 * (1 + 5.5%) = $1.688.
Investors price = $1.688 / (9.5% - 5.5%) = $42.20
b]
Yield = annual dividend / closing price
Yield = ($0.40 * 4) / $38.16 = 4.19%
c]
She would buy because the current market price ($38.16) is lower than the price determined as per the dividend growth model and her required return.
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JUDUIT to the problem 1. Page 231 Questions and Problem 1 & Page 232 problems 11...
6. You are booking an invoice into you CA project with an accounts payable condition of...
6. You are booking an invoice into you CA project with an accounts payable condition of 1.5/20 Net 60. Assuming you do not have the cash to take the discount would you take a loan within the discount days at an interest rate of 32%? Explain fully using math logic and descriptive words. 7. As a student seeking to graduate with an MBA you may have to decide on investing in projects that yield returns that are taxable and non-taxable....
Hello, I was having difficulty solving the attached problem on risk and return. Can someone lend...
Hello,
I was having difficulty solving the attached problem on risk and
return.
Can someone lend an assist?
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Having difficulty arriving at the solution of this question. 9. Risk and Return 9. Risk &...
Having difficulty arriving at the solution of this question.
9. Risk and Return
9. Risk & Return Situation Situation Probability Returns Recession 0.15 Asset A Asset B Probability Returns Exp Ret Deviation Deviations Exp Ret 2% -30 % 0.15 Normal 0.55 10% 0.55 18 % Boom 31% 0.30 15% 0.30 Expected Return= Expected Return Risk= Risk Coefficient of Variation Coefficient of Variation Asset B Asset A Parameters Asset B Asset A Expected returns Risk Coefficient of Variation
Please provide an answer to the question below. Ensure that all workings/solutions are legible. Thanks for...
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8. What type of mutual fund issues "redeemable securities" meaning that the fund stands ready to...
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4 parts of a worksheet that I need help with please. 8-1 Risk-Return Trade-Off The price...
4 parts of a worksheet that I need help with please.
8-1 Risk-Return Trade-Off The price of a stock today is $33/share. In one year, the stock will be worth $28/share and give a $2/share dividend. What is the total return on the stock? 8-2b Measuring Stand-Alone Risk: The Standard Deviation Calculate the standard deviation for a stock given the information on three different economic scenarios: Probability of Outcome 0.3 Return in Given Outcome Recessiorn Average Boom -5% 8% 0.6...
Will sellr 6. Suppose the utility is U- E(r) -0.5Ao2 for all the questions im an...
Will sellr 6. Suppose the utility is U- E(r) -0.5Ao2 for all the questions im an standard deviation risk sider a portfolio that offers an expected rate of return of 15% and a of 30%. T-bills offer a risk-free 10% rate of return. What is aversion for which the risky portfolio the maximum level of is still preferred to bills? 7. Suppose you are given the following information regarding several investments: Utility Formula Data Investment Bxpected Return E) Standard Deviation...
Problem 6.18 Following are the independent situations. Kate recently invested in real estate with the intention...
Problem 6.18 Following are the independent situations. Kate recently invested in real estate with the intention of selling the property one year from today. She has modeled the returns on that investment based on three economic scenarios. She believes that if the economy stays healthy, then her investment will generate a 30 percent return. However, if the economy softens, as predicted, the return will be 10 percent, while the return will be -25 percent if the economy slips into a...
need some help on these three problems! 4. Data on returns is in cells A2 through...
need some help on these three problems!
4. Data on returns is in cells A2 through A9. To compute the arithmetic average return, which of the following Excel formulas would you use? AVERAGE(A2:49) c C C =AVERAGE(A2:A9) =AVERAGE(A2-A9) -SUMCA2:19)/9 5. Which of the following statements is true? To compute variance, divide the sum of the squared deviations by the number of observations. To compute variance, divide the sum of the deviations by the number of observations minus The coefficient of...
6. You are booking an invoice into you CA project with an accounts payable condition of 1.5/20 Net 60. Assuming you do not have the cash to take the discount would you take a loan within the discount days at an interest rate of 32%? Explain fully using math logic and descriptive words. 7. As a student seeking to graduate with an MBA you may have to decide on investing in projects that yield returns that are taxable and non-taxable....
Hello,
I was having difficulty solving the attached problem on risk and
return.
Can someone lend an assist?
9. Risk & Return Situation Asset A Situation Probability Returns Exp Ret Deviation Recession 0. 15 2 % Normal 0.55 10% Boom 0.30 15% Expected Return = Risk = Coefficient of Variation Asset A = Asset B Probability Returns Exp Ret D eviations 0.15 -30% 0.55 18% 0. 30 3 1% Expected Return = Coefficient of Variation Asset B = Asset A...
Having difficulty arriving at the solution of this question.
9. Risk and Return
9. Risk & Return Situation Situation Probability Returns Recession 0.15 Asset A Asset B Probability Returns Exp Ret Deviation Deviations Exp Ret 2% -30 % 0.15 Normal 0.55 10% 0.55 18 % Boom 31% 0.30 15% 0.30 Expected Return= Expected Return Risk= Risk Coefficient of Variation Coefficient of Variation Asset B Asset A Parameters Asset B Asset A Expected returns Risk Coefficient of Variation
4. AT&T 10-year bonds paying 8% currently sells for 0.96 which us paying 8% currently sells for 0.96 which is equivalent to $960 in dollar terms. a. What is the current yield? b. What is the yield to maturity? c. What is the investor's price assuming she is requiring 9% return d. Would she invest in the bond? WHY? Hint use Excel Moodle for Bond Calculations uploaded in Moodle to assist with your calculations
8. What type of mutual fund issues "redeemable securities" meaning that the fund stands ready to buy or sell the shares at their net asset value WITH a transaction fee? a. No-load, closed-end fund b. No-load, open-end fund C. Load, closed-end fund d. Load, open-end fund e. None of the above 9. A return series has an arithmetic mean of 10.5% and standard deviation of 13%. Assuming the returns are normally distributed what is the range of returns that an...
4 parts of a worksheet that I need help with please.
8-1 Risk-Return Trade-Off The price of a stock today is $33/share. In one year, the stock will be worth $28/share and give a $2/share dividend. What is the total return on the stock? 8-2b Measuring Stand-Alone Risk: The Standard Deviation Calculate the standard deviation for a stock given the information on three different economic scenarios: Probability of Outcome 0.3 Return in Given Outcome Recessiorn Average Boom -5% 8% 0.6...
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Problem 6.18 Following are the independent situations. Kate recently invested in real estate with the intention of selling the property one year from today. She has modeled the returns on that investment based on three economic scenarios. She believes that if the economy stays healthy, then her investment will generate a 30 percent return. However, if the economy softens, as predicted, the return will be 10 percent, while the return will be -25 percent if the economy slips into a...
need some help on these three problems!
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