Scenario |
Dividend |
Stock Price |
Return(%)? |
Good |
$ 8 |
150 |
|
Bad |
$ 3 |
10 |
The common stock of Husker Nation Inc sells currently for $85 and will generate the following payoffs next year? Scenario Dividend Stock Price Return(%)? What is the expected return and standard deviation? (Assume same probabilities) Hint: you can use the calculator function
Scenario Dividend Stock Price Return(%)? Good $ 8 150 Bad $ 3 10 The common...
Practice Problem 11-16 Scenario Analysis (LO3)The common stock of Escapist Films sells for $30 a share and offers the following payoffs next year:Dividend Stock PriceBoom 1 $ 20Normal economy $2 29Recession 5 36Calculate the expected return and standard deviation of Escapist. All three scenarios are equally likely. Then calculate the expected return and standard deviation ofa portfolio half invested in Escapist and half in Leaning Tower of Pita. Show that the portfolio standard deviation is lower than either stock's.The common...
The common stock of Leaning Tower of Pita, Inc., a restaurant chain, will generate the following payoffs to investors next year: Probability Dividend Stock Price Boom 0.35 $7 $200 Normal economy 0.45 $5 $127 Recession 0.2 $1 $7 The company goes out of business if a recession hits. Calculate the expected rate of return and standard deviation of return to Leaning Tower of Pita share-holders. The stock is selling today for $95. (Round your answers to 2 decimal places.) Expected...
The common stock of Leaning Tower of Pita Inc., a restaurant chain, will generate payoffs to investors next year, which depend on the state of the economy, as follows: Dividend Stock Price Boom $ 9 $ 225 Normal economy 5 110 Recession 0 0 The company goes out of business if a recession hits. Assume for simplicity that the three possible states of the economy are equally likely. The stock is selling today for $100. a-1. Calculate the rate of...
Corporate Finance Midterm Initials 3) The common stock for Ignacio Corp sells for $20/share and offers the following expected payoffs for next year. (20 Points) Dividend Stock Price after Dividend 16 Ignacio Corp Expected Payouts Bust Normal Economy Boom 22 24 A) Assuming a normal economy, what is the expected dividend yield and capital gains percent return for Ignacio Corp? (4 Points) B) Assuming a boom economy, what is the expected total return for an investment in Ignacio Corp? (2...
Consider the following scenario analysis and answer the following 3 questions: Economy Probability Return on Stock A Return on Stock B Good 20% 20% 30% Normal 50% 15% 10% Bad 30% 10% 5% 14. What are the expected return and standard deviation of stock A? A) 13.5% and 5.3% B) 14.5% and 4.0% C) 14.5% and 5.3% D) 14.5% and 3.5% 15. What are the expected return and standard deviation of stock B? A) 17%...
Question Help (Common stockholder expected return) Bennett, Inc. common stock currently sells for $ 20.25 20.25 per share. The company's executives anticipate a constant growth rate of 9.4 9.4 percent and an end-of-year dividend of $ 1.25 1.25. a. What is your expected rate of return if you buy the stock for $ 20.25 20.25? b. If you require a return of 18 18 percent, should you purchase the stock?
4. The future earnings, dividends, and common stock price of Barstool Inc. are expected to grow 2% per year. Barstool’s common stock currently sells for $18.00 per share. Its last dividend was $1.50 and it will pay $1.53 dividend at the end of the current year. a. Using the DCF approach, what is its cost of common equity? b. If the beta is 2, the risk free rate is 7%, and the average return on the market is 16%, what...
Valuation of Stock 1) P. Noel Company's common stock has just paid a $2.00 dividend. If investors believe that the expected rate of return on P. Noel is 14% and that dividends will grow at the rate of 5% per year for the foreseeable future, what is the value of a share of P. Noel stock? A) $15.00 B) $22.22 C) $23.33 D) $40.00 2) Green Company's common stock is currently selling at $24.00 per share. The company recently paid...
Zebra Inc. will pay a dividend of $3 per share next year. Dividends are expected to grow at a rate of 8% until the end of year 3, and will grow at a constant rate of 3% thereafter. What is the current share price of the common stock if investors require a return of 12% on common stock?
Zebra Inc. will pay a dividend of $3 per share next year. Dividends are expected to grow at a rate of 8% until the end of year 3, and will grow at a constant rate of 3% thereafter. What is the current share price of the common stock if investors require a return of 12% on common stock?