Meman View PoliciesCurrent Attempt in ProgressThe Bank of Montreal has a noncumulative class of preferred shares with an annual dividend rate of $1.275. David Chen owns 1,500of these shares. If the Bank of Montreal declares and pays a quarterly dividend on these shares, how much cash can David expect toreceive for the quarter? If these preferred shares have a feature to reset the dividend rate, does that make these shares more or lessappealing as an investment for David? (Round answer to 2 decimal places, e.g. 5.21.)David should expect to receive a dividend of $

Dividends play a vital role in finance, serving as a mechanism for companies to reward shareholders…

Answered: Current Attempt in Progress The Bank of…

Financial Accounting: The Impact on Decision Makers

10th Edition

ISBN:9781305654174

Author:Gary A. Porter, Curtis L. Norton

Publisher:Gary A. Porter, Curtis L. Norton

Chapter11: Stockholders' Equity

Section: Chapter Questions

Problem 11.2AP

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Y6 Consider a stock priced at $40 that pays an annual dividend of $ 1 per share. An investor purchases the stock on margin, paying $20 per share and borrowing the remainder from the brokerage firm at 10 percent annual interest. a. If, after one year, the stock is sold at a price of $60 per share, what is the return on the stock? b. If investors had used only personal funds rather than borrowing funds, what would have been the stock return?
A company is considering the following two dividend policies for the next five years. Year Policy #1 Policy #2 4.00 6.90 2 4.00 2.40 4.00 5.00 4 4.00 1.70 4.00 4.00 Required: A. What is the total of the dividends per share that the stockholders will receive over the full five year period? B. If investors see no difference in the risk between the two policies, and therefore apply a 9.4% discount rate to both policies, what is the present value of each dividend stream? C. Suppose investors see Policy #2 as the riskier of the two, and they therefore apply a 9.4% discount rate to Policy #1 and a 12% discount rate to Policy #2. Under this scenario, what is the present value of each dividend stream? D. What conclusions can be drawn from this exercise? A Policy #1 Policy #2 Year 1. 2 3 4 Total over five years B Policy #1 9.40% Year Cash Flow PV Factor Present value Present value Policy #2 9.40% Cash Flow PV Factor Present value Year 1. 3 4 5 Present value Policy #1 9.40% Year Cash Flow PV…
EXCEL PROJECT AND EXCEL SOLUTION Consider the following stocks, all of which will pay a liquidating dividend in a year and nothing in the interim: Stock A Stock B Stock с Stock D Market Capitalization (5 million) 800 750 950 900 Expected Liquidating Dividend ($ million) 1000 1000 1000 1000 Beta PLEASE SHOW SOLUTIONS IN EXCEL 0.77 1.46 1.25 1.07 a. Calculate the expected return of each stock. b. What is the sign of correlation between the expected return and market capitalization of the stocks? In Problem 20, assume the risk-free rate is 3% and the market risk premium is 7%. a. What does the CAPM predict the expected return for each stock should be? b. Clearly, the CAPM predictions are not equal to the actual expected returns, so the CAPM does not hold. You decide to investigate this further. To see what kind of mistakes the CAPM is making, you decide to regress the actual expected return onto the expected return predicted by the CAPM.49 What is the intercept and slope coefficient of…
uppose you purchase one share of the stock of Volatile Engineering Corporation at the beginning of year 1 for $36. At the end of year 1, you buy one more share for $30. At the end of year 2, you sell the shares for $36.45 each. Assume no dividends were paid in both years; calculate the time-weighted (geometric average) return and dollar-weighted return on your investment.
The investment banking firm of Einstein & Co. will use a dividend valuation model to appraise the shares of the Modern Physics Corporation. Dividends (D₁) at the end of the current year will be $1.40. The growth rate (g) is 10 percent and the discount rate () is 14 percent. a. What should be the price of the stock to the public? (Do not round intermediate calculations and round your answer to 2 decimal places.) Price of the stock b. If there is a 5 percent total underwriting spread on the stock, how much will the issuing corporation receive? (Do not round intermediate calculations and round your answer to 2 decimal places.) Net price to the corporation c. If the issuing corporation requires a net price of $33.50 (proceeds to the corporation) and there is a 5 percent underwriting spread, what should be the price of the stock to the public? (Do not round intermediate calculations and round your answer to 2 decimal places.) Necessary public price
Suppose that you sell short 1,000 shares of Xtel, currently selling for $20 per share, and give your broker $15,000 to establish your margin account.a. If you earn no interest on the funds in your margin account, what will be your rate of return after one year if Xtel stock is selling at: (i) $22; (ii) $20; (iii) $18? Assume that Xtel pays no dividends.b. If the maintenance margin is 25%, how high can Xtel’s price rise before you get a margin call?c. Redo parts (a) and (b), but now assume that Xtel also has paid a year-end dividend of $1 per share. The prices in part (a) should be interpreted as ex-dividend, that is, prices after the dividend has been paid.
Suppose you invested $75 in the Ishares Dividend Stock Fund (DVY) a month ago. It paid a dividend of $0.50 today and then you sold it for $68. What was your return on the investment? A. - 9.53% В. - 8.67% С. - 9.97% D. - 11.27%
You are interested in buying the preferred stock of a bank that pays a dividend of $1.55 every quarter. If you discount such cash flows at 8 percent, what is the value of this stock? Value of the stock $enter the value of the stock
Suppose you purchase one share of the stock of Volatile Engineering Corporation at the beginning of year 1 for $36. At the end of year 1, you receive a $2 dividend and buy one more share for $30. At the end of year 2, you receive total dividends of $4 (i.e., $2 for each share) and sell the shares for $36.45 each. The dollar- weighted return on your investment is Answers: А. -1.75%. B. 8.00%. C. 4.08%. D. 8.53%. Е. 12.35%.
You are interested in buying the preferred stock of a bank that pays a dividend of $1.65 every quarter. If you discount such cash flows at 6 percent, what is the value of this stock? (Round answer to 2 decimal places, e.g. 15.25.) Value of the stock $
Roundall dollar answers to 2 decimal places and record all interest rate, coupon rate and growth rate answers as a percentrounded to one decimal place 42. Assume the Bakwerds, Inc. just issued preferred stock with an annual dividend of $4.80. If the appropriatediscount rate is 10.70%, the value of the preferred stock is $_____.43. Investors expect that the Rowboat Company will pay an annual dividend of $2.26 per share exactly one yearfrom today (i.e., D1 = 2.26). Investors also predict that this dividend payment will remain constant forever,since the company’s sales are expected to remain the same in the future. If investors require a 12 percent rateof return on Rowboat Company stock, what is the maximum price that an investor would be willing to payfor one share of this stock today?
another solution and answer for this problem What is the Value of the common stock? if the common stock has an annual dividend of $200 per share and the required return on common stock is 8% and assume to grow at a constant rate of 4% in dividends? choose the best answer: A. 3030.33 B. 3,333.33 C.3300.33 D. 3633.33

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