Fundamentals of Corporate Finance
11th Edition
ISBN: 9780077861704
Author: Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Bradford D Jordan Professor
Publisher: McGraw-Hill Education
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Chapter 17, Problem 11QP
Summary Introduction
To determine: Dividends in the next two years.
Introduction:
Any income that arises from the sale of a portion of shares other than the dividends received from the company are termed as homemade dividends.
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d. What is the rate of return on your margined
position (assuming again that you invest
$15,000 of your own money) if Xtel is selling
after 1 year at: (i) $83.62; (ii) $74; (iii) $64.38?
What is the relationship between your
percentage return and the percentage
change in the price of Xtel? Assume that Xtel
pays no dividends. (Negative values should be
indicated by a minus sign. Round your
answers to 2 decimal places.)
Rate of return for ear.
i.) ?
ii.) ?
iii.) -22.51
4. Calculating Returns [LO1] Suppose you bought a
bond with an annual coupon of 7 percent one year ago for
$1,010. The bond sells for $985 today.
a. Assuming a $1,000 face value, what was your total dollar
return on this investment over the past year?
b. What was your total nominal rate of return on this
investment over the past year?
c. If the inflation rate last year was 3 percent, what was your
total real rate of return on this investment?
Required Returns Suppose we observe a stock selling for $40 per share. The next
dividend will be $1 per share, and you think the dividend will grow at 12 percent per
of the stock? What will the stock be worth in five
Problem 1.)
7.2.
year forever. What is the dividend yield in this case? The capital gains yield? The
total required return? (See Problem 3.)
Chapter 17 Solutions
Fundamentals of Corporate Finance
Ch. 17.1 - Prob. 17.1ACQCh. 17.1 - What are the mechanics of the cash dividend...Ch. 17.1 - How should the price of a stock change when it...Ch. 17.2 - How can an investor create a homemade dividend?Ch. 17.2 - Prob. 17.2BCQCh. 17.3 - Prob. 17.3ACQCh. 17.3 - Why do flotation costs favor a low payout?Ch. 17.4 - Why might some individual investors favor a high...Ch. 17.4 - Prob. 17.4BCQCh. 17.5 - How does the market react to unexpected dividend...
Ch. 17.5 - Prob. 17.5BCQCh. 17.6 - Prob. 17.6ACQCh. 17.6 - Prob. 17.6BCQCh. 17.8 - Prob. 17.8ACQCh. 17.8 - How does the accounting treatment of a stock split...Ch. 17 - Dividends are paid to the parties listed as...Ch. 17 - Prob. 17.3CTFCh. 17 - Prob. 17.4CTFCh. 17 - Prob. 17.8CTFCh. 17 - Dividend Policy Irrelevance [LO2] How is it...Ch. 17 - Prob. 2CRCTCh. 17 - Prob. 3CRCTCh. 17 - Prob. 4CRCTCh. 17 - Prob. 5CRCTCh. 17 - Prob. 6CRCTCh. 17 - Prob. 7CRCTCh. 17 - Prob. 8CRCTCh. 17 - Prob. 9CRCTCh. 17 - Prob. 10CRCTCh. 17 - Prob. 1QPCh. 17 - Prob. 2QPCh. 17 - Prob. 3QPCh. 17 - Prob. 4QPCh. 17 - Regular Dividends [LO1] The balance sheet for...Ch. 17 - Prob. 6QPCh. 17 - Prob. 7QPCh. 17 - Stock Dividends [LO3] The company with the common...Ch. 17 - Stock Splits [LO3] In the previous problem,...Ch. 17 - Homemade Dividends [LO2] You own 1,000 shares of...Ch. 17 - Prob. 11QPCh. 17 - Stock Repurchase [LO4] Galles Corporation is...Ch. 17 - Expected Return, Dividends, and Taxes [LO2] The...Ch. 17 - Dividends and Taxes [LO2] As discussed in the...Ch. 17 - Prob. 15QPCh. 17 - Dividends versus Reinvestment [LO2] After...Ch. 17 - Prob. 1MCh. 17 - Prob. 2MCh. 17 - Prob. 3MCh. 17 - Prob. 4MCh. 17 - Prob. 5MCh. 17 - Prob. 6M
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