Buying shares in chattanooga railways

Assignment Help Finance Basics
Reference no: EM132497642

-You are considering buying shares in Chattanooga Railways.

The stock is currently trading for $46.66. Analysts expect the next annual dividend to be $1.41. (The next dividend will be paid in one year.) Dividends are expected to grow in perpetuity at the annual rate of 8.00%. Chattanooga's beta is 0.98. The risk free rate is 4.30% and the expected return on the market is 13.20%. What is the difference between the return you will earn if you buy Chattanooga for $46.66 and the equilibrium expected return given its beta of 0.98? (The first minus the second.)

Reference no: EM132497642

Questions Cloud

Write a brief abstract describing keylogger : Must contain a brief abstract describing Keylogger with 500-700 word, double spaced, written in APA format, showing sources and a bibligraphy.
Evaluate importance of each major step in policy analysis : Evaluate the importance of each major step in policy analysis as it relates to political choice. Next, debate if one would consider any of these steps
Disclose the effective annual rate : In the fine print, the manufacturer was legally obliged to disclose the effective annual rate that it charged for the loan. What rate did the manufacturer
Why institution might be reluctant to move their it to cloud : Discuss in 500 words, why institutions might be reluctant to move their IT to the cloud. Consider specific industries like education, medicine, military, etc.
Buying shares in chattanooga railways : The stock is currently trading for $46.66. Analysts expect the next annual dividend to be $1.41. (The next dividend will be paid in one year.)
Determine the objectives of master budgets : How would a master budget support the three objectives of planning, directing and control for Domino's? Determine the Objectives of Master Budgets
Determine the npv for project-brower inc : Determine the NPV for this project. Should Brower build the plant? b. How would your answer change if the value of the cedi was expected to remain unchanged
Determining the projected cash flows for project : Project I involves introducing one of the firms' drones into a new market. The following table shows the projected cash flows for each project.
Determine capital budgeting decisions : Using the net present value and the internal rate of return methods, is this a good investment? Determine Capital Budgeting Decisions

Reviews

Write a Review

Finance Basics Questions & Answers

  What is the present value of the bond today

If the current interest rate demanded by the market is 0.16, what is the present value of the bond today? The bond has a par value of $1,000.

  Should the firm call the bond at time zero

A firm has issued an 8% coupon bond that matures at time 1. The bond is callable at par on any coupon date. The firm follows a call policy that minimizes.

  What is the need for a depositor

Banks in most emerging financial markets are fully (or partially) owned by their governments. What is the need for a depositor?

  Differences between the federal deficit and federal debt

What are the differences between the Federal deficit and Federal Debt? How does a government budget deficit affect the economy

  What was the approximate real rate of return

FLYBY also received $192 in dividends. The inflation rate for the period was 4.7 percent. What was the approximate real rate of return on this investment?

  How does paradoxical thinking

How does paradoxical thinking (business operations management) relate to systems thinking?

  Problem regarding the breakeven analysis

Management believes it can sell a new product for $250. First Scale of Operations: fixed costs of production are estimated to be $50,000 and the variable costs are $215 a unit Second Scale of Operations: fixed costs of production are estimated to ..

  Explain why do we use the overall cost of capital for

q1. why do we use the overall cost of capital for investment decisions even when only one source of capital will be

  What are the effects of buybacks on asset managers

What are the effects of buybacks on asset managers? Asset managers refers to the fund management companies who own the shares which are being bought back.

  Find conditional factor demands

a. Find conditional factor demands b. is the production function homothetic? c. draw the marginal and average cost curves for w1 = w2 = 1.

  Slattery ability to achieve level of growth

What do your projections imply for Slattery's owners/managers? How would you evaluate Slattery's ability to achieve this level of growth (as measured by the increase in fixed assets)?

  What is the tax treatment of selling a depreciable asset

What is the tax treatment of selling a depreciable asset, Below its book value?

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd