What do investors expect the stock to sell

Assignment Help Finance Basics
Reference no: EM131937463

Question: Assume that the risk-free rate of interest is 6% and the expected rate of return on the market is 16%.

a. A share of stock sells for $50 today. It will pay a dividend of $6 per share at the end of the year. Its beta is 1.2. What do Investors expect the stock to sell for at the end of the year?

b. I am buying a firm with an expected perpetual cash flow of $1,000 but am unsure of its risk. If I think the beta of the firm is .5, when in fact the beta is really 1, how much more will I offer for the firm than it is truly worth?

c. A stock has an expected rate of return of 4%. What is its beta?

Reference no: EM131937463

Questions Cloud

What forward rate does the investor lock in : At time 0, Investor A enters into a forward contract, at no cost, to buy, at time 2, $100,000 par of a zero maturing at time 3.
How large will your initial withdrawal be : Assume that you saved $750,000 and invested in an account that pays 5.00%. You expect inflation to average 2%, and you want to make end-of-year withdrawals.
Examine the guidelines from the ahima practice brief : Examine the guidelines from the AHIMA practice brief, found on the AHIMA Body of Knowledge, Ensuring Data Integrity through a Clean Master Patient Index.
What is the nominal rate of interest on a corporate bond : Assume that the risk free rate is 1.0%. Inflation is expected to be 4% in year one; 3.5% in year two; 3% in year three; 2.5% in year four and then 2%.
What do investors expect the stock to sell : A share of stock sells for $50 today. It will pay a dividend of $6 per share at the end of the year. Its beta is 1.2.
In finance time value of money problems : In finance time value of money problems, a finite series of equal payments over equal periods is referred to as
Product description of the corporation : How to estimate the size of a market? I'm writing a paper on the creation a pet business; the service/product description of the corporation
What elements of the service package take place : If Galen's torque wrench measured a mean value of 61.4 foot-pounds in his re-assembly of the Camry engine, should Fred allow him to perform this work?
What equal annual payment does hillary : What equal annual payment does Hillary need to invest in order to provide for the 25 withdrawals?

Reviews

Write a Review

Finance Basics Questions & Answers

  Management fiduciary responsibility

Evaluate a management's fiduciary responsibility regarding the distribution of Net Income to dividends and/or retained earnings. Describe scenarios both pro and con for leaving money in retained earnings

  Management anticipates an increased working capital need of

1 briarcrest condiments is a spice-making firm. recently it developed a new process for producing spices. the process

  If a company is expected to generate 150 million in free

if a company is expected to generate 150 million in free cash flow next year and fcf grows at a constant 5 per year

  Calculate indifference level of ebit between the two plans

Proves your answer to show that the EPS will be the same regardless of the plan chosen at the EBIT level found in part (a).

  Assume you own an american office supplies company

Assume you own an American office supplies company. Which part of your business process would most likely be relocated to another country?

  What is the percentage price change of the given bonds

If interest rates suddenly rise by 3 percent, what is the percentage price change of these bonds? What is the percentage price change of these bonds?

  Who are the remaining general creditors

Who are the remaining general creditors? How much will each receive from distribution before surodination adjustments? What is the effect of adjusting for subordination?

  What is the periodic rate if expressed in percent form

What would be the monthly payment on a $20000 loan at 6% for 20 years? What is the periodic rate if expressed in percent form?

  Explain the key differences between the simple moving

explain the key differences between the simple moving average weighted moving average and exponential smoothing methods

  Calculation of net present value of a project with annuity

Calculation of net present value of a project with annuity and What is the project's NPV

  What will the market price of the stock be

If investors require a 16% return and the growth rate in dividends is expected to be 8%, what will the market price of the stock be?

  What is the cross-rate for british pounds

What is the cross-rate for British pounds in terms of Canadian dollars?

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd