Using the constant growth dividend model

Assignment Help Financial Management

Reference no: EM131339667

1. The required return (using the constant growth dividend model) for a share of stock is equal to:

a. Next year’s dividend divided by the current price.

b. The increase in the value of a share of stock over one year.

c. The percentage rate at which a stock increases in value.

d. The capital gains yield plus the dividend yield.

e. The payment by a corporation to shareholders in the form of cash or stock.

2. Your opinion is that CSCO has an expected rate of return of 0.1375. It has a beta of 1.3. The risk-free rate is 0.04 and the market expected rate of return is 0.115. According to the Capital Asset Pricing Model, this security is

underpriced.

overpriced.

fairly priced.

Cannot be determined from data provided.

Reference no: EM131339667

Questions Cloud

What is expected return on portfolio : Nemhain owns a portfolio that is invested 23.09 percent in stock A, 44.89 percent in stock B, and the remainder in stock C. The expected returns on these stocks are 10.7 percent, 13.65 percent, and 11.58 percent, respectively. What is the expected re..

Considering two securities : Aibell would like to invest $14,000 and have a portfolio expected return of 10.31 percent. She is considering two securities, A and B. A has an expected return of 11.22 percent and B has an expected return of 7.62 percent. How much should she invest ..

How much equity have you built up halfway through the term : This exercise is designed to be solved using technology such as calculators or computer spreadsheets. You borrow $20,000 with a term of four years at an APR of 6%. Make an amortization table. How much equity have you built up halfway through the term..

Portfolio that is invested in stock : Brigid owns a $90,000 portfolio that is invested in stock A and B. The portfolio beta is equal to the market beta. Stock A has an expected return of 13.43 percent and a beta of 1.25. Stock B has a beta of 0.73. What is the value of Brigid's investmen..

Using the constant growth dividend model : The required return (using the constant growth dividend model) for a share of stock is equal to: Your opinion is that CSCO has an expected rate of return of 0.1375. It has a beta of 1.3. The risk-free rate is 0.04 and the market expected rate of retu..

What is its times-interest-earned ratio : Graser Trucking has $19 billion in assets, and its tax rate is 40%. Its basic earning power (BEP) ratio is 13%, and its return on assets (ROA) is 5%. What is its times-interest-earned (TIE) ratio?

Find the present value of these cash flows : You have accumulated some money for your retirement. you are going to withdraw $86,264 every year at the end of the year for the next 15 years. how much money have you accumulated for your retirement? your account pays you 3.17% per year compounded a..

What the dell decision teaches us about valuation : The ruling involving Michael Dell’s management buyout highlights why two reputable share-valuation experts could differ by 126%. The May 31 Delaware Court of Chancery Decision In Re: Appraisal of Dell, Inc. highlights many of the valuation issues fac..

How much money will be in account at the end of that time : You have decided to place $442 in equal deposits every month at the beginning of the month into a savings account earning 3.40% per year,compounded monthly, for the next 6 years. the first deposit is made today. how much money will be in the account ..

User Account

All Pages