Oneperiod pricing, One-period pricing. Recall that since

Oneperiod pricing

Reference no: EM13221736

One-period pricing. Recall that since stocks have really long lives, in the video we first imagined owning a stock for only one period. In this simple, yet powerful scenario, today's stock price is the PV of next year's dividend and next year's stock price.) The stock of Alydar Oil, an all-equity firm, is currently trading at $45 per share, after just having paid a $2 per share dividend. The market expects a dividend of $3 per share to be paid one year from today. If the equity cost of capital (same as discount rate for equity) is 20% for this firm, the expected ex-dividend price (the stock price after the dividend is paid next year) in one year (t = 1) should be closest to:

Reference no: EM13221736

Questions Cloud

Explain relationship of business strategy and information : What is strategy? Explain the relationship of a Business strategy and Information systems. Give an example of such relationship.

Explain hypothetical gas-phase reaction : A flask is charged with 0.140 mol of A and allowed to react to form B according to the following hypothetical gas-phase reaction. A(g)--> B(g)

Why expediting products and storing goods are non-value : what if receiving cost is a step-fixed cost with each step being 1,500 orders whereas assembly cost is a variable cost? what is the implication for reducing the cost of waste for each activity?

What pure bundling price will maximize mgms profits : MGM is trying to decide how to price the re-release of the "Terminator" and "Honey I Shrunk the Kids." The following table identifies the willingness to pay for the movies by three theatres. The marginal cost of providing either movie is $5.

Oneperiod pricing : One-period pricing. Recall that since stocks have really long lives, in the video we first imagined owning a stock for only one period. In this simple, yet powerful scenario, today's stock price is the PV of next year's dividend and next year's stock..

Explain the dissolved oxygen by biodegradation : discharged into a small stream saturated with oxygen from the air at 25 celcius. How many liters of this water could be contaminated to the extent of removing all the dissolved oxygen by biodegradation?

What actions should jason take to obtain a contractor : What actions should Jason take to obtain a contractor to do the work? What project management tools can Jason use to facilitate obtaining a contractor to do the work?

What is optimal mix between x and y in johns market : John receives utility from consuming X and Y as given by the utility function U(X,Y) = XY. The price of X is $9, and the price of Y is $12. a. What is John's MRS (marginal rate of substitution) b. What is the optimal mix (ratio) between X and Y in ..

Explain the original no2 remains if the rate constant : How long will it take in minutes until 42% of the original NO2 remains if the rate constant is 0.0066L/(mol sec) and the initial amount of NO2 is 0.45 mol/L?

User Account

All Pages