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As a financial analyst, you are covering Singapore’s top commercial bank listed in the local bourse, which paid an annual dividend of $0.55/share on 31 December 2015. The expected return for the Singapore Straits Times Index is 3.8%. The risk free rate is 1.25% per annum.
(a) Your calculations show that this stock tracks the market index with a beta of 1.4. The annual dividend growth is estimated to be 2% per year, and is paid at the end of each year. How much would the bank’s share be valued at as of 1 January 2016?
(b) Due to its significant exposure to China’s economy, you are looking at scenario analysis and with the risk of a highly correlated global meltdown, you take the beta against the market index to be 2. While there is still an annual dividend growth of 0.5% per year, paid at the end of each year, you are now assuming zero dividend growth that from 1 January 2018 onwards, calculate the revised valuation of this stock as of 1 January 2016.
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An investment for $50,000 earns a rate of return of 1% in each month of a full year.- How much money will you have at year's end?
Six years ago Ruby Carter invested $1,000 in a $1,000 par, 20year maturity, 9 percent annual coupon rate putable bond, which can be redeemed at $900 after 5 years. If the current required rate of return on similar bonds is 13 percent, should Ruby red..
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What annual rate of return is earned on a $2000 investment made in year 3 when it grows to $3000 by the end of year six? What's the current yield of a 4.5% coupon corporate bond quoted at a price of 102.08?
Kathy St Andrews is planning to buy a house for $140,000 by borrowing money at the rate of 9%. She expects to rent the house for 6 years, collecting $11,000 annual rent in advance each year. She thinks that she can sell the house for $180,000 after 6..
ABC Company has annual sales of $133,661 and cost of goods sold of $77,478. The average accounts receivable balance is $11,372. How many days on average does it take the firm to collect its accounts receivable? That is, what is the AR Period?
Suppose that in a certain defined benefit pension plan
Assume there are 300 million people in the United States, 155 million of which make up the labor force. If 10 million people are unemployed, what is the unemployment rate?
Rudy and Karyn come across an investment opportunity that offers them a guaranteed return. The couple is excited by the opportunity but they don’t have enough liquidity to put the cash forward the investment. How can you justify your proposal? What w..
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