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A firm recently reported earnings per share of $1.70 at its annual shareholders meeting. The firm has a price/earnings multiple of 10 and a dividend payout ratio of 40%. Dividends and earnings are expected to grow at a rate of 10% for each of the next two years and at 3% indefinitely thereafter. The yield on three-month Treasury Bills is 3%. The stock has a beta of 0.8 and the market risk premium is forecasted to be 5%.
Is the stock properly valued in the market today?
a. Yes, the stock's actual price and its intrinsic value both equal $17.26.
b. No, with an intrinsic value of $17.26 the stock is undervalued in the market.
c. No, with an intrinsic value of $16.26, the stock is overvalued in the market.
d. No, with an intrinsic value of $19.92, the stock is undervalued in the market.
Marsha is 25 years old and is starting an investment program. Her first annual contribution to her investment fund will be today and will be $1,000.
The coupon rate is 8% and the market's required yield to maturity on a comparable-risk bond is 12%.
Using table, compute estimated pro?t in 1 year if ABC Corp. buys a put option with a strike of $1.00. Using table, compute estimated pro?t in 1 year if ABC Corp. sells a call option with a strike of $1.00.
Suppose Johnson? & Johnson and Walgreen Boots Alliance have expected returns and volatilities shown? here, LOADING...,
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A population consists of the following five values: 10, 11, 12, 13, and 15. a.List all samples of size 3, and compute the mean of each sample.
Provide a general overview of each of the three securities you chose. Be sure to include such information as name, company it represents (if applicable).
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