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1. Changes in Growth and Stock Valuation Consider a firm that had been priced using a 10 percent growth rate and a 13 percent required rate. The firm recently paid a $2.20 dividend. The firm has just announced that because of a new joint venture, it will likely grow at a 11 percent rate. How much should the stock price change (in dollars and percentage)?
$19.43, 16%
$41.43, 51%
$41.43, 34%
$19.43, 628%
2. Buying Stock with a Market Order You would like to buy shares of Ralph Lauren (RL). The current bid and ask quotes are $85.19 and $85.32, respectively. You place a market buy-order for 400 shares that executes at these quoted prices. How much money did it cost to buy these shares?
$34,076
$34,128
$68,204
$52
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Michael Margolis is a single parent and motivational training consultant from Reno, Arizona. He is wondering about potential returns on investments given certain amounts of risk. Michael invested a total of $6000 in three stocks ($2000 in each) with ..
ABC Corp. has a floating rate debt for which the firm pays an interest rate of LIBOR + 1%. The firm enters into an interest rate swap on the same notional principal as the floating rate debt. In the swap, the firm receives LIBOR and pays 6.5%. What i..
The following are the net cash flows for a project under consideration: F0 = -600 F1 = 3200 F2 = -2000 F3 = -6400 F4 = 6400. Plot PW (i) starting at an interest rate of 0% and ending at 350%. Find all non-negative rates of return for this project
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