An investor who wishes to purchase the stock belonging to Entity A to hold for two years will receive a dividend of $ 0.7 per share for the first year, $ 1.3 for the second year from this investment, and at the end of the second He estimates that it can be sold for $ 12.0 USD. What is the real value of the stock if the minimum rate of return expected by the investor is 20%? a) 15 b) 2.81 c) 9.81 d) 21.81 e) 5.81
Dividend Valuation
Dividend refers to a reward or cash that a company gives to its shareholders out of the profits. Dividends can be issued in various forms such as cash payment, stocks, or in any other form as per the company norms. It is usually a part of the profit that the company shares with its shareholders.
Dividend Discount Model
Dividend payments are generally paid to investors or shareholders of a company when the company earns profit for the year, thus representing growth. The dividend discount model is an important method used to forecast the price of a company’s stock. It is based on the computation methodology that the present value of all its future dividends is equivalent to the value of the company.
Capital Gains Yield
It may be referred to as the earnings generated on an investment over a particular period of time. It is generally expressed as a percentage and includes some dividends or interest earned by holding a particular security. Cases, where it is higher normally, indicate the higher income and lower risk. It is mostly computed on an annual basis and is different from the total return on investment. In case it becomes too high, indicates that either the stock prices are going down or the company is paying higher dividends.
Stock Valuation
In simple words, stock valuation is a tool to calculate the current price, or value, of a company. It is used to not only calculate the value of the company but help an investor decide if they want to buy, sell or hold a company's stocks.
An investor who wishes to purchase the stock belonging to Entity A to hold for two years will receive a dividend of $ 0.7 per share for the first year, $ 1.3 for the second year from this investment, and at the end of the second He estimates that it can be sold for $ 12.0 USD. What is the real value of the stock if the minimum
a) 15
b) 2.81
c) 9.81
d) 21.81
e) 5.81
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If the discount rate is 9%, what is the present value of 5375 USD received at the end of each year for 12 years?
a) 25000,375
b) 10000,5
c) 12450,5
d) 15500,375
e) 38490,375
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The price / earnings ratio of the beta company stock has been calculated as 7.4. If the expected earnings per share of this stock for the next year is 2.5 USD, what is the real value of the stock? If the stock of this company is currently trading at 25 USD, can the relevant stock be purchased?
a) 18.5 and should not be bought
b) 36 and must be purchased
c)
45 and must be purchased
d) 18.5 and must be purchased
e) 40 and should not be bought
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