Changes in growth and stock valuation

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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

Reference no: EM132072696

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