What will the share price be in one year

Assignment Help Finance Basics
Reference no: EM131126398

A share of stock sells for $53 today. The beta of the stock is 1.2, and the expected return on the market is 12 percent. The stock is expected to pay a dividend of $1.10 in one year. If the risk-free rate is 5.5 percent,

what will the share price be in one year?

Reference no: EM131126398

Questions Cloud

What is the expected return on the market : Assume these securities are correctly priced. Based on the CAPM, what is the expected return on the market? What is the risk-freerate?
If the risk-free rate is 6 percent and the market risk : Stock Y has a beta of 1.25 and an expected return of 14 percent. Stock Z has a beta of .70 and an expected return of 9 percent. If the risk-free rate is 6 percent and the market risk premium is 7 percent, are these stocks correctly priced?
Illustrate the relationship between portfolio expected retur : Illustrate the relationship between portfolio expected return and portfolio beta by plotting the expected returns against the betas. What is the slope of the line thatresults?
What is the expected return on a portfolio that is equally : a. What is the expected return on a portfolio that is equally invested in the two assets? b. If a portfolio of the two assets has a beta of .5, what are the portfolio weights? c. If a portfolio of the two assets has an expected return of 12 percent, ..
What will the share price be in one year : A share of stock sells for $53 today. The beta of the stock is 1.2, and the expected return on the market is 12 percent. The stock is expected to pay a dividend of $1.10 in one year. If the risk-free rate is 5.5 percent, what will the share price be ..
What is the beta of your portfolio : You own 400 shares of Stock A at a price of $60 per share, 500 shares of Stock B at $85 per share, and 900 shares of Stock C at $25 per share. The betas for the stocks are 1.2, .9, and 1.6, respectively. What is the beta of your portfolio?
Discuss the impact of the systematic risk and firm specific : Trudy plans to respond to his client within the context of Modern Portfolio Theory. a. Contrast the concept of systematic and firm-specific risk and give one example of each. b. Critique the client's suggestion. Discuss the impact of the systematic r..
Why would we expect that all assets have the same reward : Explain what it means for all assets to have the same reward-to-risk ratio. How can you increase your return if this holds true? Why would we expect that all assets have the same reward-to-risk ratio in liquid, well-functioning markets?
How would you go about exploiting this opportunity : Suppose you identify a situation in which one security is overvalued relative to another. How would you go about exploiting this opportunity? Does it matter if the two securities are both overvalued relative to some third security? Are your profits c..

Reviews

Write a Review

Finance Basics Questions & Answers

  What is the effective annual interest rate

What is the effective annual interest rate on this lending arrangement?

  How to do analysis of financial performance using financial

How to do Analysis of Financial performance using financial ratios and Compare and contrast the financial performance of the two companies

  How much will you receive as a percentage of par

A bond matures in 25 years, but is callable in 9 years at 125. The call premium decreases by 3 percent of par per year. If the bond is called in 15 years, how much will you receive as a percentage of par?

  Which of the given loan has the lowest all-in cost

The Eurobond carries a lower annual coupon of 4.25%, but the total costs of issuing the bond runs to 1.25% of the issue size. Which loan has the lowest all-in cost?

  What is the financial break-even point for the project

The appropriate discount rate is 12 percent. What is the financial break-even point for the project?

  Debt or equity

Assume you are the CFO of a major company who is deciding in whether to issue debt or equity in order to finance the firms operations which are growing more than 15 percent a year,

  What is meant by loan default

What is meant by loan default? Also, describe (a) An acceleration provision and (b) A cross-default provision.

  Describe the legislative act

Describe the legislative act and analyze how it has influenced the U.S. health care system.

  The equity method of accounting for long-term investments

the equity method of accounting for long-term investments in stock should be used when the investor has significant

  A pound today is more valuable than a pound a year hence

Question-1 Money has Time value. "A pound today is more valuable than a pound a year hence." Elaborate the statement giving reasons.

  Gordon growth model and one period valuation model

Based on the Gordon Growth Model, compute the anticipated market price of stock that is paying dividends at a constant growth rate of 6.25%, with the recent dividend of $1.00, and the required return rate of 15%.

  What are the various kinds of budgets

What are the various kinds of budgets? Please explain each. Which type of budget is best for your selected company? Which type of calendar year will you choose and why?

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