Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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- A stock just paid a dividend of D0 = $1.50. The required rate of return is rs = 8.5%, and the constant growth rate is g = 4.0%. What is the current stock price? Select the correct answer. a. $35.57 b. $36.47 c. $37.37 d. $38.27 e. $34.67arrow_forwardFind the annualized holding rate of return and the average rate of return for a stock that returned -30% in year 1 and +30% in year 2. Annualized holding rate of return = -7.00% A. -9.00% B. -15.00% C. 0.00%arrow_forwardA stock is selling today for $50 per share. At the end of the year, it pays a dividend of $3 per share and sells for $59. Required: a. What is the total rate of return on the stock? b. What are the dividend yield and percentage capital gain? c. Now suppose the year-end stock price after the dividend is paid is $44. What are the dividend yield and percentage capital gain in this case?arrow_forward
- If a stock's dividend is expected to grow at a constant rate of 5% a year, which of the following statements is correct? Select one: O a. O b. O c. The stock's dividend yield is 5%. The price of the stock is expected to decline in the future. The stock's required return must be equal to or less than 5%. Od. The stock's price one year from now is expected to be above the current price. e. The expected return on the stock is 5% a year.arrow_forwardFind the value of a stock using the constant growth DDM, if the last dividend paid is $3 and the beta=1.3, market risk premium is 8%, risk free rate is 2.6% and the dividend growth rate is 2%?arrow_forwardstock X just paid a dividend of $1 and is expected to pay a $3 dividend per year for the foreseeable future. Given that the required rate of return on stock X is 5%, what would be the fair price of stock X 3 year from today? 1. $3.86 2. 4 3. 3.47 4. 4.86 5. 60arrow_forward
- A stock just paid a dividend of D0 = $1.50. The required rate of return is rs = 9.0%, and the constant growth rate is g = 4.0%. What is the current stock price? Select the correct answer. a. $31.20 b. $33.18 c. $30.21 d. $34.17 e. $32.19arrow_forwardTable solution providearrow_forward9) see picture cant get the correct answerarrow_forward
- Please provide a step-by-step solution with an explanation.arrow_forward1. What is the difference between linear growth and exponential growth?2. What is the nominal value of the stock portfolio after 40 years?3. What is the nominal value of the bond portfolio after 40 years?arrow_forwarda) If the dividend yield is 1.40% annualized, the interest rate is -0.10% annualized, and the index is trading at 28, 144 today, what is the expected price of a 6-month forward? 28, 144e(-0.001 -0.0140)*0.50 = 27,961.66 b ) The 6-month forward is currently quoted at 28,000. Using the information above and the grid below, show how you would arbitrage this index profitably. Be sure to indicate whether each transaction is long or short ( buy or sell) and to include (+) and (-) signs on your cash flows. Use 0 decimals (whole numbers only) in your answers. Transaction Time 0 cash flows Time t cash flows Totals:arrow_forward
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