1. The value of a supernormal growth stock is the present value of the mixed growth...
1. The value of a supernormal growth stock is the present value of the mixed growth dividend payments and the present value of the constant-growth dividend payments. true or false
2. The constant-growth stock has dividends growing at a constant rate over time. true or false?
3.The yield to maturity of a bond is the discount rate that makes the present value of the coupon and principal payments equal to the price of the bond. true or false
Homework Answers
1)
TRUE
Value of a stock is always the present value of its future dividends. therefore, value will be equal to present value of its mixed and fixed stream of dividends.
2)
TRUE
A constant growth stock will have its dividends grow at a constant rate overtime.
3)
TRUE
Price of a bond is equal to present value its cash flows discounted at its yield to maturity.
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1. The value of a supernormal growth stock is the present value
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1. According to the constant dividend growth model, which of the following is true A. the...
1. According to the constant dividend growth model, which of the following is true A. the dividend yield is the same as the capital gains yield. B. the constant growth rate is the same as the dividend yield. C. the capital gains yields is the same as the constant dividend growth rate. D. The price growth rate is the same as the dividend yield. 2. Which of the following is true about stock returns? A. the dividend yield must always...
Please answer in electronic text. Thank you! 5. P You are looking at a Treasury bond that has a coupon of 4% and makes semiannual coupon payments. It matures in 10 years. a. What are the bond's c...
Please answer in electronic text. Thank you!
5. P You are looking at a Treasury bond that has a coupon of 4% and makes semiannual coupon payments. It matures in 10 years. a. What are the bond's cash flows? b. If the yield to maturity is 3.6% what is the interest rate per period? c. What is the present discounted value of the coupon payments? What is the present discounted value of the principal? What is the price of the...
The dividend growth model: I. cannot be used to value zero-growth stocks. II. cannot be used to compute a stock pri...
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Signature: Woidtke Manufacturing's stock has supernormal growth of 35 % for Year 0 to Year 1,...
Signature: Woidtke Manufacturing's stock has supernormal growth of 35 % for Year 0 to Year 1, 30 % for Year 1 to Year 2, 25% for Year 2 to Year 3 and then long-run constant g = 8% a.What is the value of this stock, if n-15% and Do is $4? b.What are dividend yield and capital gains yield?
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Problem 7-18 Supernormal Growth [LO 1] Biarritz Corp. is growing quickly. Dividends are expected to grow at a rate of 28 percent for the next three years, with the growth rate falling off to a constant 6.4 percent thereafter. If the required return is 16 percent and the company just paid a dividend of $2.95, what is the current share price? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Share price
1. According to the constant dividend growth model, which of the following is true A. the dividend yield is the same as the capital gains yield. B. the constant growth rate is the same as the dividend yield. C. the capital gains yields is the same as the constant dividend growth rate. D. The price growth rate is the same as the dividend yield. 2. Which of the following is true about stock returns? A. the dividend yield must always...
Please answer in electronic text. Thank you!
5. P You are looking at a Treasury bond that has a coupon of 4% and makes semiannual coupon payments. It matures in 10 years. a. What are the bond's cash flows? b. If the yield to maturity is 3.6% what is the interest rate per period? c. What is the present discounted value of the coupon payments? What is the present discounted value of the principal? What is the price of the...
The dividend growth model: I. cannot be used to value zero-growth stocks. II. cannot be used to compute a stock price at any point in time. III. requires the required return to be higher than the growth rate. IV. assumes that dividends increase by a constant amount forever. V. none of the above is correct Multiple Choice 0 II, and IV only 0 V only 0 1, I, II, and IV only 0 Ill only 0 In order to estimate...
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Signature: Woidtke Manufacturing's stock has supernormal growth of 35 % for Year 0 to Year 1, 30 % for Year 1 to Year 2, 25% for Year 2 to Year 3 and then long-run constant g = 8% a.What is the value of this stock, if n-15% and Do is $4? b.What are dividend yield and capital gains yield?
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