Expected one-year holding period return

Assignment Help Financial Management

Reference no: EM131890340

The risk-free rate of return is 6.5%, the expected rate of return on the market portfolio is 17%, and the stock of Xyrong Corporation has a beta coefficient of 1.8. Xyrong pays out 40% of its earnings in dividends, and the latest earnings announced were $8.50 per share. Dividends were just paid and are expected to be paid annually. You expect that Xyrong will earn an ROE of 25% per year on all reinvested earnings forever.

a. What is the intrinsic value of a share of Xyrong stock? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Intrinsic Value $

b. If the market price of a share is currently $35, and you expect the market price to be equal to the intrinsic value one year from now, what is your expected 1-year holding-period return on Xyrong stock? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Expected one-year holding period return

Reference no: EM131890340

Questions Cloud

How a meeting agenda could be used to build consensus : Discuss problem-solving realities and the roles of an agenda and procedures in mitigating them - Explain how a meeting agenda could be used to build consensus

What is the expected rate of return on market portfolio : What is the expected rate of return on the market portfolio? What would be the expected rate of return on a stock with ß = 0?

Behavioral addiction and a compulsion : Explain the difference between an behavioral addiction and a compulsion and/or addiction and dependence.

What is a skin disorder found in adults : What is a skin disorder found in adults? And what's the origin, age and common signs and symptoms?

Expected one-year holding period return : The risk-free rate of return is 6.5%, the expected rate of return on market portfolio is 17%, what is your expected 1-year holding-period return on Xyrong stock

Explain the priority nursing action at this time : 1. Explain the priority nursing action at this time. 2. Which of these medications would be an appropriate order? Why?

How the author discusses society as a concept : How the author defines and discusses "society" as a concept, and as an object of study. Article: Making Up Prople (IAN Hacking)

Understanding and modifying health behaviors : Discuss why are ecological models are important in understanding and modifying health behaviors.

List the four main components in the pathway : List the four main components in the pathway that stimulates normal cell division, and describe the activity of an oncogene version of each component.

User Account

All Pages