A share of stock with a beta

Assignment Help Financial Management

Reference no: EM131020211

A share of stock with a beta of .70 now sells for $45. Investors expect the stock to pay a year-end dividend of $4. The T-bill rate is 5%, and the market risk premium is 8%. If the stock is perceived to be fairly priced today, what must be investors’ expectation of the price of the stock at the end of the year?

Reference no: EM131020211

Questions Cloud

Runs a small manufacturing operation : Phillips Industries runs a small manufacturing operation. For this fiscal year, it expects real net cash flows of $190,000. Phillips is an ongoing operation, but it expects competitive pressures to erode its real net cash flows at 4 percent per year ..

Find the future value of an ordinary annuity if payments : Find the future value of an ordinary annuity if payments are made in the amount R and interest is compounded as given. Then determine how much of this value is from contributions and how much is from interest. The future value of the ordinary annuity..

What is the capital gain or loss on your bond : You own a bond with the following features: 9 years to maturity, face value of $1000, coupon rate of 2% (annual coupons) and yield to maturity of 1.1%. Just after you purchase the bond, the yield to maturity rises to 5.4%. What is the capital gain or..

What is the price and bond equivalent yield : A Treasury bill that settles on May 18, 2012, pays $100,000 on August 21, 2012. Assuming a discount rate of 3.23 percent, what is the price and bond equivalent yield? Use Excel to answer this question.

A share of stock with a beta : A share of stock with a beta of .70 now sells for $45. Investors expect the stock to pay a year-end dividend of $4. The T-bill rate is 5%, and the market risk premium is 8%. If the stock is perceived to be fairly priced today, what must be investors’..

What is the value of retirement plan : Assume that you contribute $170 per month to a retirement plan for 20 years. Then you are able to increase the contribution to $370 per month for the next 30 years. Given an 6 percent interest rate. What is the value of your retirement plan after the..

Derive the rate of return you would make for the six year : You have a bond that has a ytm of .10, a coupon rate of 8% and a maturity of 20 years. Find its price. After 6 years you decide to sell it. During the purchase time and the selling time market rates go to 20%. At the time of selling the bond, ytm is ..

Use schedule or the standard deduction? : If Samantha Jones had the following itemized deductions, should she use Schedule A or the standard deduction? The standard deduction for her tax situation is $6,200. (LO3.2) • Donations to church and other charities, $3,050

According to relative purchasing power parity : According to relative purchasing power parity, if the inflation rate in Italy was 8% and the inflation rate in Israel was 6%,

User Account

All Pages