Q: What rate of return can stockholders expect to receive on retained earnings?
A: Stockholders can expect returns more than its WACC on retained earnings.
Q: .What is the value of the stock?
A: The constant growth model is a method used for finding the stock price. It is also called the…
Q: Based on the dividend growth model, what are the two components of a stock’s rate of return?
A: Formula: Rate of return = Expected dividendCurrent stock price + Growth rate
Q: What’s the difference between a stock’s current market price and its intrinsic value?
A: Stock Current market price is the price at which the stock traded in the market. Intrinsic value…
Q: Common stock has par value, and market value. Explain briefly these values. Which one is most…
A: Par value of common stock : Par value corresponds to the equity valuation specified in the corporate…
Q: How would you use the dividend yield model to value the price of a stock if it presently does not…
A: Answer: Dividend discount model is used to valuate a stock that is expected to pay future dividends.…
Q: how does diversification prevent individual stock prices from going down
A: Diversification is a method that mixes a wide variety of investments within a portfolio. By doing…
Q: Are short-term profits always in the best interest of stockholders? Explain
A: Short term profits are generally earned for a period of less than one years it may be quarterly,…
Q: How does a stock price play a role in ROA or ROE
A: Return on Equity (ROE) is the ratio which defines the company’s efficiency to utilize investors…
Q: Is stock with Increasing dividend yield and decreasing market price per share a good stock to…
A: Dividend yield is the amount of money given to shareholders for owning a share of a company's stock…
Q: What factors are important when calculating the intrinsic value of a stock?
A: Intrinsic value is the current value of the stock. It is calculated by using the following formula:…
Q: what would be the stock price?
A: Current stock price refers to the present value of the share based on the future expected payoffs.…
Q: What happens when investors rate of return is greater than YTM and coupon rates?
A: The coupon rate of a bond is the annual rate of interest it pays, whereas the yield is the rate of…
Q: On what do stock valuations rest?
A: The answer:
Q: What is a stock’s volatility?
A: Stock Volatility: Volatility is defined as a statistical measure of the dispersion of the returns…
Q: Define Rate of return on stock investment.
A: Capital Stocks: Common stock and preferred stock are the two types of capital stocks. Common…
Q: Explain required rate of return on stock
A: The required rate of return is the minimum acceptable rate of return that an investor expects to…
Q: Is the following equation correct for finding the value of a constant growth stock? Explain.
A: Price of stock can be found from the constant growth model of dividend discount method.
Q: Explain how holding a portion of the earnings (Plowback ratio) could increases the stock price.
A: Answer: The term plow back is used in fundamental analysis which measure to what extent earnings are…
Q: Explain realized rate of return on stock
A: Realized Rate of Return on stock gives you the percentage return on holding the stock for a certain…
Q: Compare and contrast constant growth model and zero growth model in stock valuation. Support your…
A: The Constant Growth Model is commonly known as the Gordon Growth model that is used to calculate the…
Q: How do you calculate the beta of stock?
A: Beta is the measure of stock's volatility to the overall market, and is calculated as-
Q: What is meant by the dividend yield on a common stock investment?
A: Not all the tools of fundamental analysis work for every investor on every stock. For dividend…
Q: what can you say about the price movements of the stock? (TEL)
A: TEL is the ticker of TE Connectivity Ltd. This stock is listed in the NYSE.
Q: How do you calculate dividend yield for stock?
A: dividend yield is the ration of dividend paid by the firm divided by price of share of the firm.
Q: n the general stock and bond markets lead to changes in the required rate of return on a firm’s…
A: Step 1 The required reimbursement rate is the minimum refund that an investor will receive from…
Q: Explain how to find the value of a stock given itslast dividend, its expected growth rate, and…
A: A model that helps to evaluate the value of the stock with the assumption that the dividend will…
Q: What will be the significance of the stock buyback to an investor?
A: Introduction: Stock repurchases ensures that by buying outstanding shares of its own stock, a…
Q: Summarize the major factors affecting stock price?
A: Answer: Investment in stock market is uncertain, because stocks respond to various internal and…
Q: Explain which has a stronger effect on stock prices, the change in the interest rate or the…
A: Stock is one of the major securities issued by the companies and an important financial indicator…
Q: What is the expected return on the firms stock
A: Here, Proportion of Debt is 75% Proportion of Equity will be (1-75%) = 25% Cost of Debt is 5% Risk…
Q: What conditions must hold in order for a stock to be evaluatedusing the constant growth model?
A: Stock: It the investment in the form of equity which is a part of the ownership of a company that is…
Q: What is the difference between a stock’s price and its intrinsic value? Why do investors and…
A:
Q: Why does "maximizing firm value" equal to "maximizing stockholders' equity"?
A: Maximization of shareholders wealth means increasing the overall value of the firm, not just its…
Q: How to know what price target to buy a stock?
A: A price target is an analyst's forecast for the future value of a commodity. Price targets can apply…
Q: What effect do increasing inflation expectations have on the required returns of investors in common…
A: Inflation: it is increase in the price of most of the goods and services.
Q: Is the Stock Market Efficient?
A: Market efficiency can be defines as the extend up to which all the useful and important information…
Q: How will the change in required return influence the price of a stock? How will the dividend growth…
A: The Gordon growth model calculates the price of the stock by using the dividends, growth rate of…
Q: What is the expected growth rate of Dorpac's dividends? . What is the expected growth rate of…
A: Dividend's Constant Growth Model states that dividend is receivable perpetually and there is…
Q: What is margin requirement (for stock)?
A: While trading for the investments in the stock market, there are two methods through which investors…
Q: What is the required return on common stock using CAPM? % Use the retention growth equation to…
A: Required Rate of Return: It represents the expected return on common stock from the investors. It…
Q: What are the benefits of a stock buyback to investors?
A: Stock Buybacks refer to the repurchasing of shares by the issuer company. It is an alternative way…
Q: Why Are Stock PricesSo Volatile?
A: The prices of stocks listed on stock exchanges are dynamic and change every minute. Volatility is…
How does higher expected growth affect a stock’s value?
Step by step
Solved in 2 steps
- What is risk aversion, and how is risk aversion related to the expected return on a stock?Why might the stock price changing make sense within the context of risk and return?How will the change in required return influence the price of a stock? How will the dividend growth rate influence the price of a stock?
