Discuss given situations of computed value of a stock

Assignment Help Accounting Basics
Reference no: EM131626090

Question: Assume an investor uses the constant-growth DVM to value a stock. Listed below are various situations that could affect the computed value of a stock. Look at each one of these individually and indicate whether it would cause the computed value of a stock to go up, go down, or stay the same. Briefly explain your answers.

a. Dividend payout ratio goes up.

b. Stock's beta rises.

c. Equity multiplier goes down.

d. T-bill rates fall.

e. Net profit margin goes up.

f. Total asset turnover falls.

g. Market return increases. Assume throughout that the current dividend (D0) remains the same and that all other variables in the model are unchanged.

Reference no: EM131626090

Questions Cloud

Discuss corporations law : Only include information in your appendixes that has been directly referred to in the body of your document
Compute the latest market price of the stock : How does the justified price you computed compare to the latest market price of the stock?
Identify the plaintiff and the defendant : Who brought the appeal? What was the outcome in the lower court(s)
Why not just base the valuation on historical information : Explain the role that the future plays in the stock valuation process. Why not just base the valuation on historical information?
Discuss given situations of computed value of a stock : Assume an investor uses the constant-growth DVM to value a stock. Listed below are various situations that could affect the computed value of a stock.
Explore three key facts about short-run economic fluctuation : Explore the three key facts about short-run economic fluctuations and how the economy in the short run differs from the economy in the long run.
Define what powers does the board of directors have : What powers does the board of directors have. What is the source of their powers
Estimate net earnings for next year : An investor in Amman, Jordan, estimates that next year's sales for Amman Intercontinental Hotels, Inc. would amount to about 150 million Jordanian dinar.
How trade deficits or surpluses can influence growth of gdp : Macroeconomics Assignment- Develop a 300 word that describe how trade deficits or surpluses can influence the growth of productivity and GDP.

Reviews

Write a Review

Accounting Basics Questions & Answers

  How much control does fed have over this longer real rate

Hubbard argues that the Fed can control the Fed funds rate, but the interest rate that is important for the economy is a longer-term real rate of interest.   How much control does the Fed have over this longer real rate?

  Coures:- fundamental accounting principles

Coures:- Fundamental Accounting Principles: - Explain the goals and uses of special journals.

  Accounting problems

Accounting problems,  Draw a detailed timeline incorporating the dividends, calculate    the exact Payback Period  b)   the discounted Payback Period. the IRR,  the NPV, the Profitability Index.

  Write a report on internal controls

Write a report on Internal Controls

  Prepare the bank reconciliation for company

Prepare the bank reconciliation for company.

  Cost-benefit analysis

Create a cost-benefit analysis to evaluate the project

  Theory of interest

Theory of Interest: NPV, IRR, Nominal and Real, Amortization, Sinking Fund, TWRR, DWRR

  Liquidity and profitability

Distinguish between liquidity and profitability.

  What is the expected risk premium on the portfolio

Your Corp, Inc. has a corporate tax rate of 35%. Please calculate their after tax cost of debt expressed as a percentage. Your Corp, Inc. has several outstanding bond issues all of which require semiannual interest payments.

  Simple interest and compound interest

Simple Interest, Compound interest, discount rate, force of interest, AV, PV

  Capm and venture capital

CAPM and Venture Capital

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