3) Assume the expected market risk premium is 10% and the risk - free rate is 5%. a. ZPL stock is now selling for $68 per share. It will pay a dividend of $3 per share at the end of the year. The beta? ( expected price for ZPL at the end of the year is $77.24. What is its ;) b. Kelvin is buying a stock with an expected perpetual dividend of $300 but is unsure of its risk. If Kelvin thinks the beta of the stock is 0.8, when the beta is really 1.3, how much more will he offer for the stock t

The current price of a non-dividend-paying stock is $30. Over the next six months it is expected to rise to $36 or fall to $26. Assume the risk-free rate is zero. What is the risk-neutral probability of that the stock price will be $36? Choose the right answer:   a. 0.3 b. 0.4 c. 0.5 d. 0.6

You are considering the purchase of preferred stock that is currently selling for $57.25 and promises an annual dividend of $4.50 dividends. What is the implied return on this investment? O 7.86% O 12.72% O 8.30% O 9.61% 11.35%

Assume a stock pays a perpetual dividend of 2 dollars, has a required rate of return of 9%, a relative bid ask spread of 0.5% and a relative trading frequency of 0.1 (μ=0.1). According to the Amihud and Mendelson (1986) model, the price of the stock would be: a.$22.10 b. $2.00 c. $9.02 d. Other e. $14.50 Give typing answer with explanation and conclusion

You are considering purchasing a share of preferred stock with the following characteristics:                                                 par value                      =          $100                                     dividend rate               =          12% per year                                     payment schedule       =          quarterly                                     maturity date              =                                              required rate of return =          6% per year                                     current market price    =          $135 per share   Based on this information, answer the following:   A.  What is the dollar amount of the quarterly dividend on this stock?   B.  Using the Discounted Cash Flow Method, what is the dollar value of this stock?   C.  Using the Discounted Cash Flow Method, what is the annual expected return for this stock?   D.  Based on your answer to part B, should you invest in the stock?  Why or why not?   E.…

You are thinking of buying a stock priced at $98 per share. Assume that the risk-free rate is about 4.7% and the market risk premium is 5.5%. If you think the stock will rise to $122 per share by the end of the year, at which time it will pay a $1.74 dividend, what beta would it need to have for this expectation to be consistent with the CAPM? The beta is (Round to two decimal places.)

A share of stock with a beta of 0.76 now sells for $51. Investors expect the stock to pay a year-end dividend of $2. The T-bill rate is 3%, and the market risk premium is 7%.   a. Suppose investors believe the stock will sell for $53 at year-end. Calculate the opportunity cost of capital. Is the stock a good or bad buy? What will investors do? (Do not round intermediate calculations. Round your opportunity cost of capital calculation as a percentage rounded to 2 decimal places.)   b. At what price will the stock reach an “equilibrium” at which it is perceived as fairly priced today? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

1. A stock is currently selling for $92.45 and is expected to sell for $109.07 in 1 year.  If the company pays a dividend of $2.98 what is the stock's HPR? 2. A stock has a beta of 1.14.  The risk-free rate is 1.809% and the market risk premium is 5%.  What is the fair return on the stock?

Please answer both A stock is currently selling for $90.83 and is expected to sell for $102.27 in 1 year. If the company pays a dividend of $2.63 what is the stock's HPR? QUESTION 2 A stock has a beta of 1.18. The risk free rate is 0.974% and the market risk premium is 5%. What is the fair return on the stock?

3. a. Suppose a stock pays currently pays a $10 dividend each year and that the dividend is expected to grow at 3% each year. Suppose that the risk-adjusted discount rate for that stock is 8%. According to fundamental analysis stock prices are the present value of expected future dividends (discounted at the risk-adjusted discount rate). What should the current price of this stock be? Hint: a=(1+g)/(1+i) where g is the growth rate in dividends and i is the discount rate for stocks. Use the formula in 2. but let ?? → ∞. b. For the stock in part a, what is the expected rate of return for that stock. c. Suppose that market participants think the stock has become riskier and raise the discount rate for the stock to 10%. What is the new stock price value? What is the expected rate of return for this stock?