Expected rate of return on the market

Assignment Help Financial Management
Reference no: EM13909451

A share of stock is now selling for $120. It will pay a dividend of $10 per share at the end of the year. Its beta is 1. What do investors expect the stock to sell for at the end of the year? Assume the risk-free rate is 6% and the expected rate of return on the market is 18%. (Round your answer to 2 decimal places.)

Reference no: EM13909451

Questions Cloud

Data for the cytochome-c protein : Based on the amino acid sequence data for the Cytochome-C protein, chimpanzees and humans share an identical coding sequence. What other species identified on the chart has a coding sequence that is most closely related to the humans and chimpanze..
Investments at the time of the last deposit : At the end of each year Mr. Smith deposits $6,000 into an investment fund. The fund pays out interest each year at an annual effective interest rate of 6%. Mr. Smith is only able to reinvest this interest at an annual effective interest rate of 4%. w..
Why does hamlet wish too unnecessarily solid tissue : 1. Why does Hamlet wish this "too, unnecessarily solid tissue would condense"? What's the explanation behind his self-dangerous slants? Under what circumstances, and at which scraps of the play, does Hamlet harp on the probability of conclusion his o..
Comparison of at least two types of specialized databases : A comparison of at least two types of specialized databases, such as the following-Mobile data terminals,AFIS,Live scan,Facial recognition,Iris scan
Expected rate of return on the market : A share of stock is now selling for $120. It will pay a dividend of $10 per share at the end of the year. Its beta is 1. What do investors expect the stock to sell for at the end of the year? Assume the risk-free rate is 6% and the expected rate of r..
Should we expect its variable and fixed costs for this model : Should we expect its variable and fixed costs for this model to stay within the relevant range? Explain.
Expected return on the market portfolio : A stock has a beta of 2.0; the risk-free rate of return is 7%, and the expected return on the market portfolio is 12%. If this stock's expected return is 18%, the share are_____and their price will _____?
Annual effective rate-calculate the present value : Calculate the present value at time 0 of payments that are received continuously over each year for ten years. The payment is $100 during the first year, $105 during the second year, $110 during the third year, and so on, up to the last payment of $1..
Elisabeth kübler-ross proposed five psychological stages : Elisabeth Kübler-Ross proposed five psychological stages of dying: denial and isolation, anger, bargaining, depression, and acceptance. These stages do not occur in a specific order, and the stages often overlap. Dying people often have to rework the..

Reviews

Write a Review

 

Financial Management Questions & Answers

  Firms current unlevered value

Suppose that your firm's current unlevered value is $800,000, and its marginal corporate tax rate is 35%. Also, you model the firms PV of financial distress as a function of its debt ratio according to the relation: PV of financial distress=800,000 x..

  Used in the computation of the current and quick ratios

Describe the difference between the values used in the computation of the Current and Quick Ratios, and a situation where one might be used in lieu of the other.

  Assume the firm keeps the same amount of debt indefinitely

Imagine a corporation with $1,000,000 of assets and a debt ratio of 40%. ROE (return on equity) is expected to be 20% for the foreseeable future. Assume the firm keeps the same amount of debt indefinitely (as opposed to keeping the same debt ratio).

  Sales are expected to increase

Broussard Skateboard's sales are expected to increase by 25% from $8.0 million in 2015 to $10.00 million in 2016. Its assets totaled $3 million at the end of 2015. Broussard is already at full capacity, so its assets must grow at the same rate as pro..

  What is the value of the firm

You are going to value Lauryn’s Doll Co. using the FCF model. After consulting various sources, you find that Lauryn has a reported equity beta of 1.6, a debt-to-equity ratio of .3, and a tax rate of 30 percent. Assume a risk-free rate of 5 percent a..

  Originally repaired radios and other household appliances

Conch Republic Electronics is a midsized electronics manufacturer located in Key West, Florida. The company president is Shelley Couts, who inherited the company. When it was founded over 70 years ago, the company originally repaired radios and other..

  Find the accumulated value of this annuity

Serena receives a fifty-year annuity due that has payments that start at $2,000 and increase by 3% per year through the twenty-fourth payment, then stay level at $4,000. Find the accumulated value of this annuity at the end of fifty years if the annu..

  Find expected return-standard deviation and sharpe ratio

Stock X has an expected return of 12% and a standard deviation of 8%. Stock Y has an expected return of 8% and a standard deviation of 5%. The correlation coefficient between the returns for X and Y is 0.2. For parts A, B, and C, find expected return..

  Pv of perpetuity-required rate of return

(PV of perpetuity) If your required rate of return was 12% a year, how much would you pay today for $100 a month forever? (that is, the stream of $100 monthly payments goes on forever, continuing to be paid to your heirs after your death)

  Proportion of each payment that goes to repaying the loan

Consider a 30-year, fixed-rate mortgage. Which of the following decreases over time? 1. The balance due on the loan. 2. The monthly payment. 3. The proportion of each payment that goes to repaying the loan.

  Discuss the pros and cons of option

Merit Enterprise Corp. Sara Lehn, chief financial officer of Merit Enterprise Corp., was reviewing her presentation one last time before her upcoming meeting with the board of directors. Discuss the pros and cons of option 1, and prioritize your thou..

  Identify the buyer and seller of the option

A bank buys a five year maturity GNMA bond that is callable at par after one year, yielding 6.88 percent. The matched duration zero coupon Treasury rate is 6.11 percent. A bank buys an FHLB pass through MBS at par yielding 7.47 percent. The matched d..

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