Question

Please show the work.

1. A stock is expected to pay $0.90 per share every year indefinitely. If the current price of the stock is $18.60, and the equity cost of capital for the company that released the shares is 7.9%, what price would an investor be expected to pay per share five years into the future?

A. $18.22

B. $19.36

C. $11.39

D. $18.79

2. A $5,000 bond with a coupon rate of 5.1% paid semiannually has ten years to maturity and a yield to maturity of 6.7%. If interest rates fall and the yield to maturity decreases by 0.8%, what will happen to the price of the bond?

A. fall by $277.36

B. rise by $277.36

C. fall by $332.83

D. rise by $332.83

Answer #1

2. A $5,000 bond with a coupon rate of 5.1% paid semiannually
has ten years to maturity and a yield to maturity of 6.7%. If
interest rates fall and the yield to maturity decreases by 0.8%,
what will happen to the price of the bond?
A. fall by $277.36
B. rise by $277.36
C. fall by $332.83
D. rise by $332.83

Bristol-Myers Squibb Company (stock ticker is BMY) is expected
pay a dividend of $1.86 per share at the end of this year and a
$1.92 per share dividend at the end of the second year, you expect
its stock price to be $62.10 per share. Bristol-Myers Squibb's cost
of equity capital is 13% per year.
a. What is the most that an investor would be willing to pay
today for a share of Bristol-Meyers Squibb stock if the investor
plans...

Show Work
SAR company’s ordinary shares are expected to pay $
1.7
per share in dividends in
4
years and after which the dividends are expected to grow at
1%
annually forever. Company ABC's shares have a beta of
1.7.
The long-term return of ASX200 is
7.9%
and the return of T-bonds is
4.2%.
a.What is the expected return of SAR’s shares according to the
CAPM?
b.What is the implied price per share?
.
a. The expected return of SAR's...

XYZ company is expected to pay a dividend per share of $1.1 for
the coming year. It expected that company can maintain a dividend
growth of 15% a year for the next 3 years. Given an in-depth
analysis, it comes to term that the growth rate will decline to 5
per cent per annum and remains at that level indefinitely. The
required rate of return on the shares is 12 per cent per annum.
Calculate the current share price.
If...

A stock is expected to pay a dividend of $1 per share in two
months and in five months. The stock price is $50, and the
risk-free rate of interest is 8% per annum with continuous
compounding for all maturities. An investor has just taken a short
position in a six-month forward contract on the stock.
What are the forward price and the initial value of the forward
contract?
Three months later, the price of the stock is $48 and...

A stock is expected to pay a dividend of $1 per share in two
months and in five months. The stock price is $56, and the
risk-free rate (with continuous compounding) is 8% for all
maturities. An investor has just taken a short position in a
seven-month forward contract on the stock.`
(1) What are the forward price and the initial value of the
forward contract?
(2) Three months later, the price of the stock is $50 and the
risk-free...

Dvorak Enterprises is expected to pay a stable dividend of $7
per share per year for the next 8 years. After that, investors
anticipate that the dividends will grow at a constant rate of 3
percent per year indefinitely. If the required rate of return on
this stock is 12 percent, what is the fair market value of a share
of Dvorak?

A stock is expected to pay a dividend of $2 per share in three
months. The share price is $75, and the risk-free rate of interest
is 8% per annum with continuous compounding for all maturities. An
investor has just taken a long position in a six-month forward
contract on a share of stock.
Three months later, immediately after the payment of the
dividend, the price of the stock is $90 and the risk-free rate of
interest is still 8%...

a. Spencer Co.'s common stock is expected to
have a dividend of $6 per share for each of the next eight years,
and it is estimated that the market value per share will be $139 at
the end of eight years. If an investor requires a return on
investment of 8%, what is the maximum price the investor would be
willing to pay for a share of Spencer Co. common stock today?
(Do not round intermediate calculations. Round your answer...

A stock is expected to pay a dividend of $2 per share in three
months. The share price is $75, and the risk-free rate of interest
is 8% per annum with continuous compounding for all maturities. An
investor has just taken a long position in a six-month forward
contract on a share of stock.
a) What are the forward price and the initial value of the
forward contract?
b) Three months later, immediately after the payment of the
dividend, the...

ADVERTISEMENT

Get Answers For Free

Most questions answered within 1 hours.

ADVERTISEMENT

asked 5 minutes ago

asked 23 minutes ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 2 hours ago

asked 2 hours ago

asked 2 hours ago

asked 2 hours ago

asked 2 hours ago

asked 2 hours ago