Assume that company A is similar in terms of industry and other characteristics to firms B, C, and D. If you are using the average P/E ratio of the comparable firms, what should the price of Stock A be if it's expected earnings are $2.25 per share? Stock Stock B Stock C Stock D $18.93 $18.98 Ⓒ$60.77 $60.95 Price per share $37.22 $56.92 $421.34 Earnings per share $2.05 $2.96 $1.09 AVERAGE P/E Ratio

Assume that company A is similar in terms of industry and other characteristics to firms B, C, and D. If you are using the average P/E ratio of the comparable firms, what should the price of Stock A be if it's expected earnings are $2.25 per share? Stock Stock B Stock C Stock D $18.93 $18.98 Ⓒ$60.77 $60.95 Price per share $37.22 $56.92 $421.34 Earnings per share $2.05 $2.96 $1.09 AVERAGE P/E Ratio

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Q3) Consider the following two companies and their forecasted returns for the upcoming year: (picture) A. What is the standard deviation of the returns on each company's stock (Company A, and B) (write all formulas). B. Of these two stocks, which is riskier? Justify your answer
Q4:4 Discuss the Dividend Discount Model in stock valuation from the following aspects (1) Explain the underlying assumptions of DDM valuation model . < (2) Identify the factors that must be estimated when value the stock with this model. (3) Explain the problems in using dividend valuation model to value the companies that are quite small and are growing rapidly.
b) Indicate which of the following companies are likely to have share prices increases by placing the number in the marked square Expected Cash Returns Required Return Company A Company B Company C Company D Company E 10% 9% 11% 13% 12% 10% 13% 12% 14% 14% 1 A 2 A and B 3 В 4 A, C and D E
Colonel Motors (C) Separated Edison (S) Expected Return 10% 8% Standard Deviation 6% 3% Please represent graphically all potential combinations of stocks C and S, if the correlation coefficient between the returns of stocks C and S is: A) 1 B) 0 C) -1 Please report these investment opportunity sets in the corresponding Excel sheets.
Suppose you have the following information from Muscat stock market Second day closing price Stock Share Base day outstanding Closing price Salalah company Dhofar power company | 26 Oman company 18 3 2.8 2.8 3.1 10 4.1 2.1 Dhofar bank 28 3 1.8 Calculate 1. Price weighted index 2. Value weighted index
Q1: Regression of Price to Earning ratios on growth rates, betas, and payout ratios for stocks listed on the in April 2021. Thus a stock with an earnings growth rate of 20%, a beta of 1.15, and a payout ratio of 40% would have had an expected PE ratio of: You are attempting to value a private firm with the following characteristics:The firm had net profits of $10 million. It did not pay dividends, but had depreciation allowances of $5 million and capital expenditures of $12 million in the most recent year. Working capital requirements were negligible.The earnings had grown 25% over the previous five years, and are expected to grow at the same rate over the next five years.The average beta of publicly traded firms, in the same line of business, is 1.15, and the average debt-equity ratio of these firms is 25%. (The tax rate is 40%.) The private firm is an all-equity-financed firm, with no debt. P/E = 18.90 + 0.0695 *Growth - 0.5082 Beta - 0.4262 Payout Estimate the appropriate PE…
Compare the year end price of Dollar Inc. and Target Corp. As an investor, what would these two charts tell you, and who would you choose to invest in and why?
Case Study 1: A common measure of the relative value of a company's stock is the price to earnings ratio... A relatively low PE indicates either a relatively undervalued stock or a company expected to have low or even negative future earnings growth, while a relatively high PE indicates either an over-valued stock or a company expected to have robust future earnings growth. Consider the following companies, for which we want to determine the aggregate PE: Company A B с D PE Ratio 22.50 24.20 20.00 60.00 Find the right statistical tool, then state the reason for using that tool.
1. stock EPS share price Growth rate A $0.30 $4.80 4% B $0.40 $5.50 6% C $0.50 $7.50 7% D $0.60 $8.00 5% Using the PEG ratio, rank the stocks in order of investment opportunity, the first having the best, the last having the worst. A. C,B,D,A B. A,D,B,C C. C,D,B,A D. B,D,C,A 2.Which of the following not true regarding financial statement A.Group financial statement be produced by each subsidiary as well as the parent entity B.Profit must be separated between members of the parent company and that of minority interest C.Minority interest share of equity represents that ‘part of a subsidiary’s equity not allocated to members of the parent company. D.Group financial statements must be produced by the parent entity only. E.None of the options provided.
Plz. Solve both
8.

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