require a return of 18% on similar stocks, how much is the stock worth and is it a good buy?

Q: if stock 1 provides 10% rate of return and stock 2 expects 30% rate of return. what can we say about…

A: The efficient market hypothesis is the market theory that is very prominent in investment strategies…

Q: Stock A has a required return of 11%.  Stock B has a required return of 9%.  Both stocks have the…

A: As per dividend discounting model the present value of a stock is P0 = Div1/Ke-g  ( where Div1 is…

Q: CAPM Elements Risk-free rate (RF) Market risk premium (RPM) Happy Corp. stock's beta Required rate…

A: The capital asset pricing model aids analysts and investors in calculating the expected return on…

Q: If the market portfolio unexpectedly goes down 25% (i.e., there is a -25% return on the aggregate…

A: Downtrend in the investment portfolio Your investment portfolio may be losing money for a number of…

Q: Continue considering Firm XYZ. If the dividends for Firm XYZ are the same for common and preferred…

A: Step 1:Given Information: Firm Name = XYZPreferred Stock Dividend Per Year = Common Stock Dividend…

Q: You are evaluating two stocks and trying to decide if they are underv You are given the following…

A: Alpha of stock shows that how is the performance of stock based on the risk involved in the stock so…

Q: You are thinking of buying a stock priced at $100 per share. Assume that the risk-free rate is about…

A: CAPM model is capital asset pricing model which is used to calculate required return. It takes into…

Q: he price of a stock is:

A: The price of a stock is the present value of all expected future dividends, discounted at the…

Q: What is the cost of a issuing common stock at S50 if the flotation cost is 2.5%, the beta is 1.3,…

A: The objective of the question is to calculate the cost of issuing common stock given the flotation…

Q: A stock has a CAPM return of 4.4% and an HPR return of 5.5%.  Which of the following is true?…

A: Data given: CAPM = 4.4% HPR = 5.5%

Q: stock that a growth rate of 0% must have a dividend yield that is equal to the required return…

A: The growth of company depend on various factor that include the company reinvestment date and the…

Q: the actual rates of change were 6% for IP and 2% for INT respectively, What is your best guess for…

A: The required rate of return  is the lowest rate of return an investor would take in exchange for a…

Q: Using just a put option (which controls 100 shares) with a delta of -0.75 and a position in the…

A: Delta neutral is a portfolio approach in which positive and negative deltas are balanced across…

Q: Initial Final Shares Initial Value of Outstanding stock Stock Price Price (million) $million) АВС…

A: In this we have to calculate initial market value and final value and find the difference between…

Q: hy did you use the dividend yield to calculate the Stock price in 5yrs?  why not use the current…

A: The price of stock can be found as the present value of dividends and the future growth of dividends…

Q: .Consider stock XYZ. If the current book value is 100, the current earnings per share is 10, the…

A: Given, Current Book Value = 100 Current Earnings per share = 10 Growth Rate =3% Discount Rate = 13%…

Q: Please respond to both. You buy a stock when you expect that its price will rise, you short a stock…

A: When it comes to stocks, "gain" or "loss" typically refers to the change in the value of an…

Q: Please answer both A stock is currently selling for $90.83 and is expected to sell for $102.27 in 1…

A: Holding Period Return (HPR) is a financial metric that quantifies the total return on an investment…

Q: hich of the following is most likely a correct statement in regards to stock valuation models? The…

A: Solution:- We know that price of a stock is the present value of the expected future dividends along…

Q: Select all that are true with respect to a Price/Earnings (P/E) ratio. Group of answer choices Low…

A: Price/Earnings (P/E) ratio-This ratio helps to  compare the price of a company's stock to the…

Q: Stock A has a required return of 4%. Stock B has a required return of 5%. Both stocks have the…

A: Required return refers to the minimum amount received by the investors on the initially invested…

Q: Assume these are the stock market and Treasury bill returns for a 5-year period: T-Bill Return Year…

A: Variables in the question:Formula used:Risk premium=Stock market return - T-bill return

Q: Which is the better investment: common stock par value of $10 per share, or common stock with no par…

A: Common stock is a type of equity investment which will provide with appreciation in the value of…

Q: A stock is currently selling for $97.84 and is expected to sell for $107.31 in 1 year. If the…

A: We are given that:P1 (Price after one year) = $107.31P0 (current price) = $97.84D (Dividend income)…

Q: Consider a stock that has a Beta of 0.85. You expect the long-term return on the market to be 9.75%…

A: CAPM is also known as capital asset pricing model. It helps in know the expected return on the…

Q: Round your answers to the nearest cent. a. What is the value of a stock if: Do $1.20 k = 13% 9 = 9%…

A: Dividend  growth model The model, which assumes that the growth of dividends remains the same…

Q: Round your answers to the nearest cent. a. What is the value of a stock if: Do = $3.10 k = 12% g =…

A: “Since you have posted a question with multiple sub-parts, we will solve first three subparts for…

Q: A non-dividend-paying stock has a current price of 800 ngwee. In any unit of time (t, t + 1) the…

A: Given, (a) (u )= 25% Increase in % = 1 + 25% = 1.25 d = 20% Decrease % = 1 - 20% = 0.80 R = 1.04  Up…

Q: A stock is currently selling for $92.45 and is expected to sell for $109.07 in 1 year.  If the…

A: The overall return on an asset or investment portfolio over the time it has been kept is known as…

Q: What is the expected rate of return for this non-constant growth stock? You have evaluated this…

A: A rate of return is the net profit or loss on an investment over a given period of time represented…

Q: A firm's stock has a beta of 1.7. The expected T-bill return is 3.7%. and the expected market return…

A: Risk-free rate(expected T-bill return) = 3.7%Beta = 1.7Expected market return = 7%

Q: The risk-free rate of return is 2.5%, the required rate of return on the market is 11.5%, and ABC…

A: The Capital Asset Pricing Model (CAPM) is the model which shows the relationship between the…

Q: The following graph plots the current security market line (SML) and indicates the return that…

A: 1.)Rf will also be 2 percent higher if the inflation rate increases by 2 percent. We also know that…

Q: e dividend-growth model may be used to value a stock: und your answers to the nearest cent. a. What…

A:

Q: just to make sure: in order to calculate the expected return of stock in our case the Rm is 7% or…

A: Formula for E(R) = Risk-free rate(Rf) + Beta of the stock x (Market Return(Rm) - Risk free rate(Rf))

Q: Find the value of a stock using the constant growth DDM, if the last dividend paid is $3 and the…

A: The question is related to Capital Asset Pricing Model amd Gorden's Model.  The CAPM the ke is…

Q: (a)Jack is considering investing in the stocks. The two stocks are available with the following…

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Q: If an average share of stock is expected to yield a return of 7.2% and comparable Treasury bonds…

A: In this question we need to compute the value of market risk premium.

Q: Analogue Technology has preferred stock outstanding that pays a $9 annua dividend. It has a price of…

A: The required rate of return is the return that the investor expects for investing in the asset. When…

Q: What would be impact on price of stock if the required rate of return moves to, 12.5 percent, 13.5…

A: There is an inverse relationship between the required rate of return and the price of stock…

Q: FlavR Company stock has a beta of 2.14, the current risk-free rate is 2.14 percent, and the expected…

A: Beta = 2.14 Risk free rate = 2.14% Market return = 9.14%

Q: What is the intrinsic price of a stock that pays a dividend of $2.43, has a dividend growth rate of…

A: Stock valuation method is essentially based on the concept of time value of money. The stock…

Stock Yields

The stock yield is otherwise known as the dividend yield. The dividend yield is an annual payment of the stock dividends to the holder of a firm’s stock. The dividend yield is a financial ratio to measure the value of dividend payout every year for the relative stock price. The yield of a stock is usually shown in a percentage that discloses the expected future earnings from stock depending on the current stock price in the future. Stock yield will change depending on the market fluctuations and in accordance with the market fluctuations, the dividends will be increased or decreased by the firm.