Compare your estimated stock prices with actual stock prices

Reference no: EM132252793

1. Using the two companies Nike and Adidas past dividend payout information between 2014 and 2018, compute the growth rate (g) for these companies.

2. First, let's assume that the required return (R) is 10% for all these companies. Using R, dividend information, and growth rate (g) from question 1, compute the stock prices of these companies. Second, let's assume that the required return (R) is 20% for all these companies. Using R, dividend information, and growth rate (g) from question 1, compute the stock prices of these companies.

3. Compare your estimated stock prices with actual stock prices as of January 2, 2019. Then tell me whether each stock is undervalued or fair-valued or overvalued based on your estimation. What's your decision if you hold these stocks? What's your decision if you don't hold these stocks?

4. Using annual stock price between 2013 and 2018, compute the following returns. For stock price data, use the closing price of the last trading day of the year:
1) Total Dollar Return for 2014, 2015, 2016, 2017, 2018
2) Total Percent Return for 2014, 2015, 2016, 2017, 2018

5. Using annual stock price between 2013 and 2018, compute the following returns. For stock price data, use the closing price of the last trading day of the year:
1) Arithmetic Average Return
2) Geometric Average Return
3) Holding Period Return
4) 2-year forecast Return (Hint: Blume's formula)
5) 3-year forecast Return (Hint: Blume's formula)

Reference no: EM132252793

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