Homework Answers
Expected return=expected dividend yield+expected capital gains yield=5.2%+47/43-1=14.50%
Required return=risk free rate+beta*market risk premium=6%+1.2*(9%-6%)=9.60%
This stock is undervalued by 490 basis points
Add Answer to:
Value and Returns A stock has an expected dividend yield of 5.2% a price today of $43 and an expected sale price in one...
The price of a stock today is $800. One year from today, the price is expected...
The price of a stock today is $800. One year from today, the price is expected to be $840 and the stock is expected to pay a dividend of $16 per share. The risk-free rate is 0.06, the expected return on the market is 0.16, and the beta of the stock is 0.6. Calculate the stock's alpha. Express your answer with two digits after the decimal point (e.g., 0.12 or -0.12).
4. If a stock is expected to pay a $2 dividend, and has an expected growth...
4. If a stock is expected to pay a $2 dividend, and has an expected growth rate of 9%, what is the expected rate of return if the stock sells for $50. 5. What price would you pay for a stock that just paid a $1 dividend has a 6% growth rate, if your required rate of return is 15%? 6. What is the expected rate of return on a stock if the risk free rate is 2%, the market...
A stock is expected to pay a dividend of $1.00 each year for the next 3 years, after that the dividend is expec...
A stock is expected to pay a dividend of $1.00 each year for the next 3 years, after that the dividend is expected to grow at a constant rate of 7% per year forever. The stock s required rate of return is 11%. What is intrinsic value of the stock today Assume that the risk-free rate is 2% and the required return of the market is 8%. What is the required return of a stock with a beta of 1.25?...
1- Stock A has a current price of $25.00, a beta of 1.25, and a dividend...
1- Stock A has a current price of $25.00, a beta of 1.25, and a dividend yield of 6%. If the Treasury bill yield is 5% and the market portfolio is expected to return 16%, what should Stock A sell for at the end of an investor’s two year investment horizon? (Hint: Solve for the growth rate using the Gordon Growth Model). Question options: $31.00 $31.78 $32.15 ,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,, 2-HMTV has planned on diversifying into the dual-PVR field. As a result,...
Calculate: 1. Horizon Value 2. Intrinsic Value 3. the expected dividend yield for black sheep's stock...
Calculate: 1. Horizon Value 2.
Intrinsic Value 3. the expected dividend yield for black sheep's
stock today
Black Sheep Broadcasting Company (BSBC) just paid a dividend of $2.88 per share. The company expects the coming year to be very profitable, and its dividend is expected to grow by 20.00% over the next year. After the next year, though, Black Sheep's dividend is expected to grow at a constant rate of 4.00% per year. Complete the following table, assuming that the...
EVALUATING RISK AND RETURN Stock X has a 10% expected return, a beta coefficienta 0.9. and...
EVALUATING RISK AND RETURN Stock X has a 10% expected return, a beta coefficienta 0.9. and a 35.0 standard deviation of expected returns. Stock Y has a 12.5% expected return a beta coefficient of 1.2, and a 25% standard deviation. The risk-free rate is 6%, and the market risk premium is 5%. al Calculate each stock's coefficient of variation. Which stock is riskier for a diversified investor? Calculate each stock's required rate of return. d. On the basis of the...
You are considering an investment in Justus Corporation's stock, which is expected to pay a dividend of $2.00 a share at...
You are considering an investment in Justus Corporation's stock,
which is expected to pay a dividend of $2.00 a share at the end of
the year (D1 = $2.00) and has a beta of 0.9. The
risk-free rate is 3.7%, and the market risk premium is 5.0%. Justus
currently sells for $44.00 a share, and its dividend is expected to
grow at some constant rate, g.
Assuming the market is in equilibrium, what does the market
believe will be the...
You are considering an investment in Justus Corporation's stock, which is expected to pay a dividend...
You are considering an investment in Justus Corporation's stock, which is expected to pay a dividend of $2.00 a share at the end of the year (D4 = $2.00) and has a beta of 0.9. The risk-free rate is 2.7%, and the market risk premium is 5.5%. Justus currently sells for $32.00 a share, and its dividend is expected to grow at some constant rate, g. The data has been collected in the Microsoft Excel Online file below. Open the...
You are considering an investment in Justus Corporation's stock, which is expected to pay a dividend...
You are considering an investment in Justus Corporation's stock,
which is expected to pay a dividend of $2.75 a share at the end of
the year (D1 = $2.75) and has a beta of 0.9. The
risk-free rate is 5.5%, and the market risk premium is 4.5%. Justus
currently sells for $50.00 a share, and its dividend is expected to
grow at some constant rate, g. The data has been collected in the
Microsoft Excel Online file below. Open the...
Sheridan Industries common stock has a beta of 1.2. If the market risk-free rate is 5.2...
Sheridan Industries common stock has a beta of 1.2. If the
market risk-free rate is 5.2 percent and the expected return on the
market is 8.2 percent, what is Sheridan’s cost of common stock?
I solved this problem incorrectly by doing
Kes=Rrf+(Betaesx market risk
premium)
Kes=0.052+(1.2x0.082)
Kes=0.052+0.098400
Kes=0.1504=15.0%
I'm not sure what I am doing wrong. Please show full
calculation.
X Your answer is incorrect. Sheridan Industries common stock has a beta of 1.2. If the market risk-free rate is...
Calculate: 1. Horizon Value 2.
Intrinsic Value 3. the expected dividend yield for black sheep's
stock today
Black Sheep Broadcasting Company (BSBC) just paid a dividend of $2.88 per share. The company expects the coming year to be very profitable, and its dividend is expected to grow by 20.00% over the next year. After the next year, though, Black Sheep's dividend is expected to grow at a constant rate of 4.00% per year. Complete the following table, assuming that the...
EVALUATING RISK AND RETURN Stock X has a 10% expected return, a beta coefficienta 0.9. and a 35.0 standard deviation of expected returns. Stock Y has a 12.5% expected return a beta coefficient of 1.2, and a 25% standard deviation. The risk-free rate is 6%, and the market risk premium is 5%. al Calculate each stock's coefficient of variation. Which stock is riskier for a diversified investor? Calculate each stock's required rate of return. d. On the basis of the...
You are considering an investment in Justus Corporation's stock,
which is expected to pay a dividend of $2.00 a share at the end of
the year (D1 = $2.00) and has a beta of 0.9. The
risk-free rate is 3.7%, and the market risk premium is 5.0%. Justus
currently sells for $44.00 a share, and its dividend is expected to
grow at some constant rate, g.
Assuming the market is in equilibrium, what does the market
believe will be the...
You are considering an investment in Justus Corporation's stock, which is expected to pay a dividend of $2.00 a share at the end of the year (D4 = $2.00) and has a beta of 0.9. The risk-free rate is 2.7%, and the market risk premium is 5.5%. Justus currently sells for $32.00 a share, and its dividend is expected to grow at some constant rate, g. The data has been collected in the Microsoft Excel Online file below. Open the...
You are considering an investment in Justus Corporation's stock,
which is expected to pay a dividend of $2.75 a share at the end of
the year (D1 = $2.75) and has a beta of 0.9. The
risk-free rate is 5.5%, and the market risk premium is 4.5%. Justus
currently sells for $50.00 a share, and its dividend is expected to
grow at some constant rate, g. The data has been collected in the
Microsoft Excel Online file below. Open the...
Sheridan Industries common stock has a beta of 1.2. If the
market risk-free rate is 5.2 percent and the expected return on the
market is 8.2 percent, what is Sheridan’s cost of common stock?
I solved this problem incorrectly by doing
Kes=Rrf+(Betaesx market risk
premium)
Kes=0.052+(1.2x0.082)
Kes=0.052+0.098400
Kes=0.1504=15.0%
I'm not sure what I am doing wrong. Please show full
calculation.
X Your answer is incorrect. Sheridan Industries common stock has a beta of 1.2. If the market risk-free rate is...
Most questions answered within 3 hours.
-
Please explain all the options in brief.
In a forest fire, many oak trees were destroyed....
asked 4 minutes ago -
Queuing Theory Problem:
Traffic to a message switching system , arrives in a random
pattern at...
asked 12 minutes ago -
During the past six months, 73.2 percent of US households
purchased sugar. Assume that these expenditures...
asked 23 minutes ago -
Which is a possible value for the principal quantum number
n?
7, 3.14 , 2.5, None...
asked 26 minutes ago -
Everyone loves a helium filled balloon for a party. Do some
basic Internet research and answer...
asked 26 minutes ago -
Here is a pair of aromatic compounds that each have a complicated
set of aromatic peaks....
asked 44 minutes ago -
As with many public goods, determining the appropriate level of
government support for the production of...
asked 48 minutes ago -
Write a balanced chemical equation for the oxidation reaction
between Caro’s acid (H2SO5) and CN– ion...
asked 51 minutes ago -
Calculate the number of valence electrons for
[Mo(C6H6)(CO)3]
asked 1 hour ago -
Which of the following are true about the strength of the
association between two variables?
1-...
asked 57 minutes ago -
You are a monopolist and know that your consumers have a linear
demand curve. At what...
asked 56 minutes ago -
Raising a heavy load requires work. Raising it in half the time
requires:
asked 1 hour ago