What must be investors expectation of the price of the stock

Assignment Help Financial Management
Reference no: EM132047428

A share of stock with a beta of 0.73 now sells for $48. Investors expect the stock to pay a year-end dividend of $4. The T-bill rate is 6%, and the market risk premium is 9%. If the stock is perceived to be fairly priced today, what must be investors’ expectation of the price of the stock at the end of the year? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Reference no: EM132047428

Questions Cloud

Prepare wertz journal entry to record the change : The tax rate is 35%. Prepare Wertz's 2014 journal entry to record the change in accounting principle
Investigate the relationship between the ages and ldl : As part of a research program for a new cholesterol? drug, a pharmaceutical company would like to investigate the relationship between the ages and LDL?
What is the terminal or horizon-value of operations : Kendra Enterprises has never paid a dividend. What is the terminal, or horizon, value of operations?
What do the terms business ethics-social responsibility mean : What do the terms business ethics and social responsibility mean? Why are they important components of a firm's overall philosophy toward conducting business?
What must be investors expectation of the price of the stock : If the stock is perceived to be fairly priced today, what must be investors’ expectation of the price of the stock at the end of the year?
Create your nab company name in detail : Throughout this course, you will develop a series of written papers / projects that you will later combine into a complete business plan for a Non-Alcoholic.
Indirect quote for the six-month euro-dollar forward rate : The indirect quote for the six-month Euro/dollar forward rate should be:
Dollar-based percentage return earned by the investor : Calculate the U.S. dollar-based percentage return earned by the investor.
Write a business plan which will provide direction : Write a business plan which will provide direction and increase the probability for success of a business idea within the today contemporary

Reviews

Write a Review

Financial Management Questions & Answers

  Afford to take the job and maintain decent lifestyle

You work as a financial consultant for a major national company. she could afford to take the job and maintain a decent lifestyle.

  Return on investment of the fund and considered standard

which is the difference between the return on investment of the fund and a return that is considered a standard.

  Determine the dollar aic and the dollar cash flow that dvr

Determine the dollar AIC and the dollar cash flow that DVR would have to pay under a currency swap where it borrows ¥1,750,000,000 and swaps the debt service into dollars. This problem can be solved using the Excel spreadsheet CURSWAP.xls.

  Calculate the value of each of the bonds

Calculate the value of each of the bonds shown in the following? table, all of which pay interest semiannually.

  Compute the payback statistic for project

Compute the payback statistic for Project B if the appropriate cost of capital is 13 percent and the maximum allowable payback period is three years.

  Lower interest rate risk then do short-term bonds

Long-term bonds have lower interest rate risk then do short-term bonds. Long-term bonds have lower reinvestment rate risk then do short-term bonds.

  What is required rate of return on preferred stock

What is the required rate of return on a preferred stock with a $50 par value, a stated dividend of 10% of par, and a current market price of (a) $51, (b) $83, (c) $119, and (d) $148 (assume the market is in equilibrium with the required return equal..

  What should the stock sell for today

The rate of discount for pricing this stock is 8%. What should the stock sell for today?

  What is thundershorse weighted average cost of capital

If Thundershors's beta is estimated at 1.1 what is Thundershorse's weighted average cost of capital?

  Determine if the firm paid dividends and if so how much

The firm’s 2011 Retained Earnings account was $200,000. Determine if the firm paid dividends and if so how much.

  Cash break-even quantity and financial break-even quantity

A project has the following estimated data: price = $54 per unit; variable costs = $29.16 per unit; fixed costs = $6,100; required return = 16 percent; initial investment = $13,000; life = three years. Ignoring the effect of taxes, the accounting bre..

  Compute percentage total return

Suppose a stock had an initial price of $82 per share, paid a dividend of $1.20 per share during the year, and had an ending share price of $90. Compute the percentage total return.

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