What does this firms beta measure

Assignment Help Financial Management

Reference no: EM131459074

A rapidly growing firm is currently paying a dividend of $1.75. The dividend growth rate is expected to be 8% for the next 6 years. The dividend growth rate after the first 6 years is expected to be 3% annually. The expected return on the market is 9%, the risk free rate is 5% and the firm’s Beta is 0.80.

a. Calculate estimated price (intrinsic value) for a share of this firm’s stock.

b. What does this firm’s Beta measure?

Reference no: EM131459074

Questions Cloud

Existing shareholders : Existing shareholders:

Valuable for investors in todays interest rate environment : Which type of fixed income do you see as most valuable for investors in today’s interest rate environment? Why?

Classified as a covered employer : For social security purposes, what conditions must an individual meet to be classified as a "covered" employer?

Must stargate register this offering : Stargate Realty, a real estate development company, is a limited partnership organized in Georgia. Must Stargate register this offering?

What does this firms beta measure : A rapidly growing firm is currently paying a dividend of $1.75. What does this firm’s Beta measure?

Calculate intrinsic value for stock : A stock is currently selling for $45, pays dividend of $1.50. Dividends are expected to grow at constant rate of 7% year. Calculate intrinsic value for stock.

Financial planner offers you two different investment plans : Your financial planner offers you two different investment plans. At what discount rate would you be indifferent between these two plans?

What is required rate of return on firms stock : Assume that Temp Force has beta coefficient of 1.2 that risk-free rate is 7.0%-that market risk premium is 5%. What is required rate of return on firms stock.

Should the dealer choose a long hedge or a short hedge : Should the dealer choose a long hedge or a short hedge? Explain his spot market position and his futures market position.

User Account

All Pages