Gloria the Investor, Finance Basics

Assignment Help:
Gloria the Investor

Gloria is a seasoned sales manager with a very large international company. Although she has a great deal of experience with sales, she has little experience with investing. Gloria has been investing in her company’s 401K plan. However she has decided to invest some extra money on her own. Gloria has $75,000 she would like to invest.

Since she has recently signed up for internet access to a broker, she is allowed a small number of phone calls to a broker at no additional charge to her.

She calls ABC investments and talks with a Mr. Bill. She tells Mr. Bill she would like to invest in undervalued stocks and can he recommend about ten stocks for her to research. Mr. Bill tells Gloria his company has about 15 stocks they believe are undervalued and will outperform the marker over time. Mr. Bill gave her the company web site where she can down load that list of stocks.

Below is a list of those stocks:

rating


Stock Price


Total 2003

Dividends




5 year total dividend growth


Beta

1


$12.05




$0.95




0.65%




0.65

2


$28.02




$0.00




-100.00%




2.3

3


$17.75




$0.00




0.00%




1.89

4


$92.43




$1.30




6.23%




1.2

5


$63.79




$0.75




0.95%




1.35

6


71.11




$6.00




5.00%




.67

7


$10.00




$0.00




0.00%




1.78

8


$49.51




$0.68




0.75%




0.95

9


$101.00




$5.00




0.38%




0.92

10


$39.78




$0.00




-90.00%




1.5

11


$29.75




$2.00




2.25%




0.85

12


$73.09




$0.00




-1.00%




0.38

13


$20.39




$6.00




5.25%




0.71

14


$18.25




$1.00




8.00%




1

15


$7.00




$1.35




8.85%




0.73















Treasury Bond Rate




4.30%








Return on the Bond Market


11.90%








Answer the below questions

Calculate the required rate of return using the Capital Asset Pricing Model (CAPM).

Using the constant growth formula, calculate the value of each stock

Compare the values you calculated in questions 1 & 2. Do the values closely approximate the stocks market price? If not why not?

What do your results mean for Gloria?

How does your result affect the “market efficiency” theory.

Related Discussions:- Gloria the Investor

Commercial bank for short term loans, Commercial Bank for Short Term Loans ...

Commercial Bank for Short Term Loans Purpose Why Commercial Banks Prefer To Lend Short Term Loans a) Long-term forecasts are not only difficult although also vague as unc

Determine the approximate payback period, The business plan for a new compa...

The business plan for a new company that has obtained a 5 year lease for operating a local bus service is shown below.  Items marked with an asterisk represent continuous cash flow

Drawback of stock repurchases, Drawback of Stock Repurchases 1. High ...

Drawback of Stock Repurchases 1. High price A company may find it not easy to repurchase shares at their recent value and price paid may be higher to the detriment of rem

Retirement, Ask quQUESTION 1 1. In the ratio test used to determine whether...

Ask quQUESTION 1 1. In the ratio test used to determine whether a qualified plan is nondiscriminatory, what is the minimum percentage of nonhighly compensated employees who must be

Financial Institution Regulations, Why are financial institutions heavily r...

Why are financial institutions heavily regulated, with specific focus on their ability to increase or reduce the money supply?

Present value concept - discounted cash flow techniques, Present Value Conc...

Present Value Concept - Discounted Cash Flow Techniques This perception acknowledges the fact which a shilling losses value along with time and as that if it is to be compared

Weighted average cost of capital, Below is information provided for tw...

Below is information provided for two companies, A and B.  Assuming a risk-free rate of 2.5%, an effective tax rate of 40%, and a market risk premium of 5.5%, estimate th

Stock market index, Stock Market Index Definition of Stock Market Ind...

Stock Market Index Definition of Stock Market Index An index is a numerical figure that measures relative change in variables between two type of durations. Examples

Write Your Message!

Captcha
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