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- You are considering three investments. The first is a bond that is selling in the market at $1 200. The bond has a $1 000 par value, pays interest at 8% and is scheduled to mature in 10 years. For bonds of this risk class you believe that a 9% rate of return should be required.
The second investment that you are analyzing is a preferred stock ($125 par value) that sells for $120 and pays an annual dividend of $18. Your required rate of return for this stock is 16%.
The last investment is a common stock that recently paid a $2 dividend. The firm expects to pay a dividend of $2.18 at year end and this growth in dividends per share is expected for the indefinite future. The stock is selling for $20 and you think a reasonable required rate of return for the stock is 20%.
a. Calculate for each security
i. Expected rate of return
ii. The current value based on your required rate of return
b. Which of the investment(s) should you accept? Why?
Greta, an elderly investor, has a degree of risk aversion of A = 4 when applied to return on wealth over a 4-year horizon. She is pondering two portfolios, the S&P 500 and a hedge fund, as well as a number of 4-year strategies. (All rates are annual,..
Calculate the standard deviation of a portfolio of 50% in Stock A and 50% in Stock B, assuming the stock returns have:
Why do you think this action by USX was so well received by the stock market?
Explain the project assessment methods the organization should have used to assess these projects (IRR, NPV, payback, and ARR).
If it's the company's policy to always maintain a constant growth rate in its dividends, what is the current dividend per share? What is the dividend per share
Given the following information, calculate the expected return and standard deviation for a portfolio that has 45 percent invested in Stock A, 35 percent in Stock B, and the balance in StockC.
How many shares does the company need to issue (in millions to three decimal places)? (Hint: required amount/(1-spread) = issue amount)
1. What factors do you see driving Deere's future revenue and earnings growth? What are some of the risks that could adversely impact future growth?
Explain Congestion area , Trend line, Wall and Count terms as it relates to point-and-figure charting:
You are trying to assess the value of a small retail store that is up for sale. The store generated cash flow to it owner of $100,000 in the most profitable year of operation and is expected to have growth of about 5 percent a year in perpetuity.
If Alice had purchased shares at $60, what is her percentage gain or loss? Also, if Alice had purchased CALL and PUT options with a $60 strike price
Identify and thoroughly describe the factors that led to American involvement in World War I.
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