V Investments: High-Dividend Stocks (Compare Exercise42 in Section 6.1.) During the first quarter of 2015, PlainsAll American Pipeline L.P. (PAA) stock cost $50 per share,was expected to yield 5% per year in dividends, and had arisk index of 2.0, while Total SA (TOT) stock cost $50 pershare, was expected to yield 6% per year in dividends, andhad a risk index of 3.0.20You have up to $45,000 to investin these stocks and would like to earn at least $2,400 individends over the course of a year. (Assume the dividendto be unchanged for the year.) How many shares of eachstock should you purchase to meet your requirements andminimize the total risk index for your portfolio? What is theminimum total risk index?

The risk index shows the result of risk assessment or risk inherent in the investment in particular…

Answered: to be unchanged for the year.) How many…

to be unchanged for the year.) How many shares of each stock should you purchase to meet your requirements and minimize the total risk index for your portfolio? What is the minimum total risk index ?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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RAK Ceramic is currently paying dividend Tk. 4.40 per share, which is expected to grow at a constant rate per year. Investors required rate of return is 15 percent. Calculate the price of the stock based on average growth of the stock, and justify your findings to take stock investment decisions. (CMP=77.50 Tk.) Year Dividend per share Growth rate 2014 3.25 Tk. 2015 3.65 Tk. 2016 3.95 Tk. 2017 4.25 Tk. 2018 5.30 Tk. 2019 4.40 Tk.
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Given the following information for the stock of Foster Company, calculate the risk premium on its common stock. Current price per share of common stock $58.14 Expected dividend per share next year $1.95 Constant annual dividend growth rate 7.5% Risk-free rate of return 7.2% a. The risk premium on Foster stock is ___ % Just need that a answered