Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
expand_more
expand_more
format_list_bulleted
Concept explainers
Topic Video
Question
A share of common stock just paid a dividend of $1.00. If the expected long-run growth rate for this stock is 5.4%, and if investors' required rate of return is 12.6%, then what is the stock price?
Please explain and show calculations.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by stepSolved in 3 steps with 2 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.Similar questions
- An analyst gathered the following information for a stock and market parameters: stock beta = 1.42; expected return on the Market = 11.41%; expected return on T-bills = 2.12%; current stock Price = $9.64; expected stock price in one year = $12.81; expected dividend payment next year = $1.54. Calculate the required return for this stock. Please share your answer as a percentage rounded to 2 decimal places.arrow_forwardA stock is expected to pay a dividend of $1.76 at the end of the year. The required rate of return is rs = 16.07%, and the expected constant growth rate is g = 4.2%. 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.arrow_forwardA stock will pay a dividend of $3.5 and is expected to sell for $87.8 in one year. If the current price is$19.4, what is the return. Answer as a percent. Answer:arrow_forward
- A stock sells for $ 49.14 . The next dividend will be $ 2.58 per share. If the expected return is 15 %, what must be the expected growth of the stock?arrow_forwardA stock is expected to pay a dividend of $0.75 at the end of the year. The required rate of return is r = 10.5%, and the expected constant growth rate is g = 5.6%. What is the stock's current price?arrow_forwardA stock is selling for $50 in the market. The required rate of return is 9%. The most recent dividend paid is D0 = $3.0 and dividends are expected to grow at a constant rate g. What’s the expected capital gain for this stock?arrow_forward
- An analyst gathered the following information for a stock and market parameters: stock beta= 1.08; • expected return on the Market = 11.97%; • expected return on T-bills = 1.55%; • current stock Price = $9.01; • expected stock price in one year = $11.14; • expected dividend payment next year = $3.23. Calculate the expected return for this stock. Please share your answer as a percentage rounded to 2 decimal places.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_forwardWhat would you pay for a stock, which just paid a $4.17 dividend (d0), if the expected dividend growth rate is 4% and you require a 9.5% return on your investment?arrow_forward
- A stock has a sustainable growth rate of 4.2% and a return on equity of 23.8%. What is the plowback ratio? Enter your answer as a percentage. Do not include the percentage sign in your answer. Enter your response below rounded to 2 DECIMAL PLACES. Numberarrow_forwardAssume that a stock is giving $2 dividends and the expected rate of return is 10%, how much the stock price will be selling today?arrow_forwardYou are considering the purchase of a new stock. The stock is expected to grow at 2.52% for the foreseeable future and just paid a $2.88 dividend (D0). The required return is 8.2%. Based on this, what is the value of the stock? Round calculations to the nearest cent.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Essentials Of InvestmentsFinanceISBN:9781260013924Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.Publisher:Mcgraw-hill Education,
- Foundations Of FinanceFinanceISBN:9780134897264Author:KEOWN, Arthur J., Martin, John D., PETTY, J. WilliamPublisher:Pearson,Fundamentals of Financial Management (MindTap Cou...FinanceISBN:9781337395250Author:Eugene F. Brigham, Joel F. HoustonPublisher:Cengage LearningCorporate Finance (The Mcgraw-hill/Irwin Series i...FinanceISBN:9780077861759Author:Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan ProfessorPublisher:McGraw-Hill Education
Essentials Of Investments
Finance
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Mcgraw-hill Education,
Foundations Of Finance
Finance
ISBN:9780134897264
Author:KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:Pearson,
Fundamentals of Financial Management (MindTap Cou...
Finance
ISBN:9781337395250
Author:Eugene F. Brigham, Joel F. Houston
Publisher:Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i...
Finance
ISBN:9780077861759
Author:Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:McGraw-Hill Education