Reference no: EM13846760
1) A stock has a required return of 9%. The risk-free rate is 5% and the market risk premium is 3%. What is the stock's beta? If the market risk premium increased to 4%, what would happen to the stock's required rate of return? Assume that the risk-free rate and the beta remain unchanged
2) Magoo Contacts & Glasses, Inc. is expected to generate 300 million in free cash flow next year, and the FCF is expected to grow at a constant rate of 3% per year indefinitely. Magoo has no debt or preferred stock, and its WACC is 8%, If Magoo has 40 million of shares of stock outstanding what is the stock's value per share?
Then, please answer the following question: How can CAPM be used to estimate a stock's required rate of return?
3) Williams has a beta of 2.0 while Hemberg has a beta of 0.4. The risk-free rate is 5%, and the required rate of return on an average stock is 12%. The expected rate of inflation falls by 1%, the real risk-free rate remains constant, the required return on the market falls to 10%, and all betas remain constant. After all these changes what will be the difference in the required return for Williams and Hemberg.
4) VeggieStrips has been growing at a rate of 8% per year in recent years. This growth is expected to last for another 3 years, then decline to 3%.
a. If D(0) = $1.60 and r(s) =10%, what is VS stock worth today? What are their expected dividends and capital gains yield at this time (year1)?
b. Assume that VS period of 8% a year growth will last 6 years instead of 3. How would this affect the price, dividend yield, and capital gains yield? Answer in words only.
c. What will VS dividend yield and capital gains yield be once the 8% growth ends?
d. Of what interest to investors is the changing relationship between dividend and capital gains yields over time?
|
What is annualized return from two investments
: Suppose you have $30,000 to invest. You’re considering Miller-Moore Equine Enterprises (MMEE), which is currently selling for $50 per share. You also notice that a call option with a $50 strike price and six months to maturity is available. What is y..
|
|
Read the case below and develop a draft
: Read the case below and develop a draft (1000-1500 words in APA format) of a plan Paul would have done if he had stayed. The plan is a means to identify, on a general level, the options for management to consider and for Paul to pursue further. Ass..
|
|
Describes a strategic compensation plan
: Write a 1200-1500 word paper in APA format that describes a strategic compensation plan for machine operators at Plastec Company. Refer to the descriptions of this company below. Include at least 3 referenced articles and cite them as appropriate
|
|
What is the future value if payments are ordinary annuity
: What is the present value of the payments if they are in the form of ordinary annuity? What is the present value if the payments are annuity due? Suppose you plan to invest the payments for five years. What is the future value if the payments are an ..
|
|
What would happen to the stocks required rate of return
: A stock has a required return of 9%. The risk-free rate is 5% and the market risk premium is 3%. What is the stock's beta? If the market risk premium increased to 4%, what would happen to the stock's required rate of return? VeggieStrips has been gro..
|
|
The continuously compounded risk-free interest rate
: A European option gives its owner the right to exchange two shares of Stock R for a share of Stock S at the end of 9 months. The value of this option is $8.96. The continuously compounded risk-free interest rate is 9%.
|
|
What was the contribution of malcolm x to the civil rights
: What was the contribution of Malcolm X to the civil rights cause? What was his connection with the Nation of Islam, and did that organization achieve its goals?
|
|
Assessing the impact of an incentive plan
: Ladbrecks is a major department store with fifty retail outlets. The company's stores compete with outlets run by companies such as Nordstrom, Macys, Marshall Fields, Bloomingdales and Saks Fifth Avenue. The plan was implemented in stores sequentiall..
|
|
Explain how the revolt on the slave ship
: Explain how the revolt on the slave ship- AMISTAD- and the court case over the Africans on board this ship had an influence on the Abolitionist movement in America. Be detailed in your answer. Give key facts, people and events to help support your an..
|