Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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- A stock price P0=$23, and is expected to pay D1 = $1.242 one year from now and to grow at a constant rate of g=8% in the future. Suppose this analysis was conducted in January 1, 2002, what is the expected price at the end of 2002 and what is the Capital gains yield?arrow_forwardA stock just paid a $1.9 dividend yesterday. The dividend is expected to grow at 1.2% per year thereafter. If the required rate of return of the stock is 10.1%, then using the dividend discount model, the stock price should be__arrow_forwardIf D0 = $1.75, g (which is constant) = 3.6%, and P0 = $32.00, what is the stock's expected total return for the comingyear?arrow_forward
- Suppose GDL just paid a dividend of $2 and the required return on the stock is 10%. What growth rate must investors expect if the stock currently sells for $53? Answer to 4 decimal places, for example 0.1234. 9.6364arrow_forwardWhat would the CAT stock value be if the constant growth rate were 5% instead of 4%? (The current dividend and the required rate of return are the same as in the previous example, $4.50 and 9.72%, respectively.) $______ (Hint: the growth rate, g, affects both the numerator and the denominator.) The value of the Caterpillar stock (with a $4.50 last-year dividend and a 4% growth rate, as in Example 1) three years from now is expected to be $_____, to the nearest penny. (Hint: to find the value of a constant growth stock expected n years from now, we need a dividend expected one year ahead, in year n+1.)arrow_forwardA stock just paid a dividend of D0 = $1.50. The required rate of return is rs = 8.5%, and the constant growth rate is g = 4.0%. What is the current stock price? Select the correct answer. a. $35.57 b. $36.47 c. $37.37 d. $38.27 e. $34.67arrow_forward
- Suppose that the initial dividend on a stock is £1. The interest rate is 3 percent and the growth rate of dividends is constant at 2 percent. What Is the prics of the stock?arrow_forwardA stock is selling today for $50 per share. At the end of the year, it pays a dividend of $3 per share and sells for $59. Required: a. What is the total rate of return on the stock? b. What are the dividend yield and percentage capital gain? c. Now suppose the year-end stock price after the dividend is paid is $44. What are the dividend yield and percentage capital gain in this case?arrow_forwardA stock just paid a dividend of $3.85 and is expected to maintain a constant dividend growth rate of 4.9 percent indefinitely. If the current stock price is $62, what is the required return on the stock?arrow_forward
- A stock just paid $2.7 dividend yesterday. The dividend is expected to grow at 3.4% per year thereafter. If the required rate of return of the stock is 10.5%, then using the dividend discount model, the stock price should be _______. (Round your answer to two decimal places, such as 12.34).arrow_forwardA stock is expected to pay a dividend of $1.99 at the end of the year. The required rate of return is rs = 13.82%, and the expected constant growth rate is g = 8.0%. What is the stock's current price?Round your answer to two decimal places. For example, if your answer is $345.6671 round as 345.67 and if your answer is .05718 or 5.7182% round as 5.72. A. $39.61 B. $29.71 C. $34.14 D. $42.68 E. $35.51arrow_forwardA stock has a required rate of return of 13.99%, and it sells for $24.02 per share. The dividend is expected to grow at a constant rate of 1.6% per year. What is the expected dividend? (Round your answer to 2 decimal places)arrow_forward
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