Question

BF Ltd has just paid a dividend of $3 per share. If the dividends are expected...

BF Ltd has just paid a dividend of $3 per share. If the dividends are expected to grow at a constant rate of 4% per year indefinitely, what will be the share price (to the nearest dollar) in 4 years- time, if investors require a return of 6%?

Group of answer choices

A. $182

B. $189

C. $135

D. $156

Currently, your portfolio consists of $3,000 invested in share A with a beta of 0.7 and $4,000 in share B with a beta of 0.5. You have another $12,000 to invest and want to divide it between share C with a beta of 1.3 and a risk-free asset. You want your portfolio beta to be 0.9. How much (to the nearest dollar) should you invest in the risk free asset?

Group of answer choices

A. $10,000

B. $ 2,000

C. $8,800

D. $3,000

Consider the following information about a share portfolio :

State of Economy

Probability of State of Economy

Portfolio Return if the State Occurs

Boom

0.6

15%

Bust

0.4

4%

What is the portfolio risk ?

A. 2.9%

B. 4.62%

C. 3.27%

D. 5.39%

Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Widget Manufacturers Inc. just paid a $3 per share dividend. It is expected that dividends will...
Widget Manufacturers Inc. just paid a $3 per share dividend. It is expected that dividends will grow at 10.00% per year for the next 2 years, at 6.00% the third year and 3.00% every year thereafter. Widget’s’ equity beta is 0.90, while the risk-free rate is 3.20% per year and the market risk premium is 6.00% per year. Based on this information, compute the price per share of Widget stock. Round your answer to the nearest penny. For example, $2,371.243...
Sierra Corporation has just paid a dividend of $2 per share, and its dividends are expected...
Sierra Corporation has just paid a dividend of $2 per share, and its dividends are expected to grow at a steady rate of 6% for the foreseeable future. The firm’s shares are currently selling for $30 per share, with an equity beta of 1.2. The risk-free rate is 5% and expected market return is 12%. What is the firm’s estimated cost of equity if we were to calculate it as the average of the costs of equity from the dividend...
Musical Charts just paid an annual dividend of $1.84 per share. This dividend is expected to...
Musical Charts just paid an annual dividend of $1.84 per share. This dividend is expected to increase by 2.1 percent annually. Currently, the firm has a beta of 1.12 and a stock price of $31 a share. The risk-free rate is 4.3 percent and the market rate of return is 13.2 percent. What is the cost of equity capital for this firm?
Schnus Corporation just paid a dividend of $5.75 per share, and that dividend is expected to...
Schnus Corporation just paid a dividend of $5.75 per share, and that dividend is expected to grow at 20 percent each year for the next two years, and at constant rate of 8.50% per year thereafter. The company’s beta is 1.50, the required return on the market is 12.50%, and the risk-free rate is 2.40%. Calculate the company’s intrinsic value. thankyou !
National Advertising just paid a dividend of D 0 = $1.25 per share, and that dividend...
National Advertising just paid a dividend of D 0 = $1.25 per share, and that dividend is expected to grow at a constant rate of 6.50% per year in the future. The company's beta is 1.5, the required return on the market is 10.50%, and the risk-free rate is 4.50%. What is the company's current stock price? a. $16.64 b. $17.26 c. $18.89 d. $19.02
A firm has just paid a dividend of 11, dividends are expected to grow at 3%...
A firm has just paid a dividend of 11, dividends are expected to grow at 3% in the future. If the firm has a beta of 0.8 and the market risk premium and risk free rate are 10.7% and 3.2% respectively, then what is the intrinsic value of this firm today?
Q1/A stock has an expected return of 11.7 percent and a beta of 1.54, and the...
Q1/A stock has an expected return of 11.7 percent and a beta of 1.54, and the expected return on the market is 8.4 percent. What must the risk-free rate be? (Enter answer in percents, not in decimals.) Q2/You want to create a portfolio equally as risky as the market, and you have $500,000 to invest. Information about the possible investments is given below: Asset Investment Beta Stock A $149,241 0.82 Stock B $134,515 1.36 Stock C -- 1.44 Risk-free asset...
Runtan Inc. has just paid an annual dividend of $0.45 per share. Analysts expect the firm's...
Runtan Inc. has just paid an annual dividend of $0.45 per share. Analysts expect the firm's dividends to grow by 5% forever. Its stock price is $34.9 and its beta is 1.7. The risk-free rate is 2% and the expected return on the market portfolio is 8%. What is the best guess for the cost of equity?
b) You want to create a portfolio twice as risky as the market, and you have...
b) You want to create a portfolio twice as risky as the market, and you have $500,000 to invest. Given this information, fill in the rest of this table: ASSET INVESTMENT BETA Share A $150,000 1.5 Share B $200,000 2 Share C 2.5 Risk-free asset
A company, GameMore, has just paid a dividend of $4 per share, D0=$ 4 . It...
A company, GameMore, has just paid a dividend of $4 per share, D0=$ 4 . It is estimated that the company's dividend will grow at a rate of 16% percent per year for the next 2 years, then the dividend will grow at a constant rate of 7% thereafter. The company's stock has a beta equal to 1.4, the risk-free rate is 4.5 percent, and the market risk premium is 4 percent. What is your estimate of the stock's current...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT