Based on the constant-growth dividend discount model

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1. Your portfolio consists of $ 4000 investment in each of 18 different common stocks. The portfolio beta is 1.30. Suppose you want to sell one stock of the existing portfolio with a beta of 0.95 and use the proceeds to buy another stock with a beta of 1.3. Calculate the new portfolio beta.

2. The initial outlay of Project A is $1,000 and its profitability index is 1.5. What is the corresponding NPV? How about the IRR?

3. A firm pays a current dividend of $2 which is expected to grow at a rate of 4% indefinitely. If the current value of the firm’s share is $56, what is the required return based on the constant-growth dividend discount model?

Reference no: EM132054502

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