EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN: 9781337514835
Author: MOYER
Publisher: CENGAGE LEARNING - CONSIGNMENT
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Chapter 6, Problem 11P
Summary Introduction
To determine: The value of share if an investor requires 9% return on his security.
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Assume that you own a dividend-paying stock currently worth $150. You plan to sell the
stock in 250 days. In order to hedge against a possible price decline, you wish to take a short
position in a forward contract that expires in 250 days. The risk-free rate is 5.25 percent.
Over the next 250 days, the stock will pay dividends according to the following schedule:
Days to Next Dividend Dividends per Share (S)
30
1.25
120
1.25
210
125
A. Calculate the forward price of a contract established today and expiring in 250 days.
B. It is now 100 days since you entered the forward contract. The stock price is $115.
Calculate the value of the forward contract at this point.
C. At expiration, the price of the stock is $130. Calculate the value of the forward contract
at expiration.
An investor who wishes to purchase the stock belonging to Entity A to hold for two years will receive a dividend of $ 0.7 per share for the first year, $ 1.3 for the second year from this investment, and at the end of the second He estimates that it can be sold for $ 12.0 USD. What is the real value of the stock if the minimum rate of return expected by the investor is 20%?
a) 15b) 2.81c) 9.81d) 21.81e) 5.81
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If the discount rate is 9%, what is the present value of 5375 USD received at the end of each year for 12 years?a) 25000,375b) 10000,5c) 12450,5d) 15500,375e) 38490,375
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The price / earnings ratio of the beta company stock has been calculated as 7.4. If the expected earnings per share of this stock for the next year is 2.5 USD, what is the real value of the stock? If the stock of this company is currently trading at 25 USD, can the relevant stock be purchased?
a) 18.5 and should not be boughtb) 36 and must be purchasedc) 45 and must be purchased
d) 18.5…
A stock will pay a $1 dividend next year, a $2 dividend the year following, and a
$3 dividend in year 3, at which time it will be acquired for $12 per share. If
investors require a 12% return, what is the current value of the stock?
(Round to the nearest cent and do not enter a dollar sign)
Chapter 6 Solutions
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Ch. 6 - Prob. 1QTDCh. 6 - Prob. 2QTDCh. 6 - Prob. 3QTDCh. 6 - Prob. 4QTDCh. 6 - Prob. 5QTDCh. 6 - Prob. 6QTDCh. 6 - Prob. 7QTDCh. 6 - Prob. 8QTDCh. 6 - Prob. 9QTDCh. 6 - Prob. 11QTD
Ch. 6 - Prob. 12QTDCh. 6 - Prob. 13QTDCh. 6 - Prob. 14QTDCh. 6 - Prob. 15QTDCh. 6 - Prob. 16QTDCh. 6 - Prob. 17QTDCh. 6 - Prob. 1PCh. 6 - Prob. 2PCh. 6 - Prob. 3PCh. 6 - Prob. 4PCh. 6 - Prob. 5PCh. 6 - Prob. 6PCh. 6 - Prob. 7PCh. 6 - Prob. 8PCh. 6 - Prob. 9PCh. 6 - Prob. 10PCh. 6 - Prob. 11PCh. 6 - Prob. 12PCh. 6 - Prob. 13PCh. 6 - Prob. 14PCh. 6 - Prob. 15PCh. 6 - Prob. 16PCh. 6 - Prob. 17PCh. 6 - Prob. 18PCh. 6 - Prob. 19PCh. 6 - Prob. 20PCh. 6 - Prob. 21PCh. 6 - Prob. 22PCh. 6 - Prob. 23PCh. 6 - Prob. 24PCh. 6 - Prob. 25PCh. 6 - Prob. 26PCh. 6 - Prob. 27P
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