One Corporation Bhd has just paid a dividend of RM2.38 per share and is expecting rapid growth, where dividend is expected to grow at a rate of 12% per year for the next three years, followed by 5% per year, forever. If the required rate of return is 10%, calculate the current stock price. You own a portfolio that is invested 15 percent in Stock X, 35 percent in Stock Y, and 50 percent in Stock Z. The expected returns on these three stocks are 9%, 15% and 12%, respectively. What is the expected return on the portfolio?

One Corporation Bhd has just paid a dividend of RM2.38 per share and is expecting rapid growth, where dividend is expected to grow at a rate of 12% per year for the next three years, followed by 5% per year, forever. If the required rate of return is 10%, calculate the current stock price. You own a portfolio that is invested 15 percent in Stock X, 35 percent in Stock Y, and 50 percent in Stock Z. The expected returns on these three stocks are 9%, 15% and 12%, respectively. What is the expected return on the portfolio?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter7: Common Stock: Characteristics, Valuation, And Issuance

Section: Chapter Questions

Problem 6P

See similar textbooks

Similar questions

You are evaluating the stock of XYZ Corp. Suppose that the required rate of return for the firm is 20%. Suppose future dividends are expected to grow at 10% per year. The current stock price of the firm is $55. What is the expected dividend per share next year (D1)? a. $4.5 b. $4.0 c. $5.0 d. $5.5
Lucky Star Berhad has just paid RM0.50 annual dividend. The dividend is expected to increase by 12 percent for the next two years and another 10 percent for the subsequent two years. Afterwards, a more stable 7 percent growth rate can be assumed. Calculate the value of this stock if the required rate of return is 10 percent.
The Airasiang Berhad is expected to pay a dividend of RM1.25 per share at the end of the year, and that dividend is expected to grow at a constant rate of 6 percent per year in the future. The company’s beta is 1.15, the market risk premium is 5.5 percent and the risk free rate is 4 percent. What is the Airasiang Berhad’s current stock price? If the dividend already paid at RM1.75, the growth which is constant at 3.6 percent, and the price of the stock is RM32.00, what is the stock’s expected total return for coming year? Makan Incorporations has a stock with a required rate of return of 10.25 percent, and it sells for RM57.50 per share. The dividend is expected to grow at a constant rate of 6 percent per year. What is the expected year end dividend for this stock?
Each of two stocks, A and B, is expected to pay a dividend of $2 in the upcoming year. You require a return of 10% on both stocks. The expected growth rate of dividends is 4% for stock A and 5% for stock B. Using the constant-growth DDM, the intrinsic value of stock A will be higher or lower than company B?
Gamzan Corporation is expected to pay dividend of Rs. 20 this year. This dividend is expected to grow at 11% rate for the next 4 years, after that dividend is expected to grow at a rate of 14% for the next 3 years and after that dividend is expected to grow at a constant rate of 6% for ever. What should be the market price per share of this stock, if the expected return on this stock is 18%? If the market price per share is Rs. 122, will you purchase this share? Give reasons to justify your answer.
NoRagrets, Inc is expected to pay a dividend in year 1 of $2 and a dividend in year 2 of $2.40. After year 2, dividends are expected to grow at the rate of 6% per year. An appropriate required return for the stock is 9%. The stock should be worth _______ today. Select one: a. $79.63 b. $73.21 c. $67.32 d. $73.37
You expect a share of stock to pay dividends of $3 in one year. After that dividends are expected to grow at 10% for two years and after that you believe that the company will increase dividends at a constant rate of 6%. How much is your estimate for the stock price if the required rate of return is 12%? Please show fomulas