Stock''s expected constant growth rate, Financial Accounting

The beta coefficient for Stock C is bC = 0.2, and that for Stock D is bD = - 0.8. (Stock D's beta is negative, showing that its rate of return rises whenever returns on most other stocks fall. There are very few negative-beta stocks, though collection agency and gold mining stocks are sometimes cited as examples.)

a. If the risk-free rate is 9%and the expected rate of return on an average stock is 10%, what are the required rates of return on Stocks C and D?

b. For Stock C, assume the present price, P0, is $25; the next expected dividend, D1, is $1.50; and the stock's expected constant growth rate is 4%. Is the stock in equilibrium? Describe, and explain what would happen if the stock is not in equilibrium.

Posted Date: 3/30/2013 1:38:12 AM | Location : United States







Related Discussions:- Stock''s expected constant growth rate, Assignment Help, Ask Question on Stock''s expected constant growth rate, Get Answer, Expert's Help, Stock''s expected constant growth rate Discussions

Write discussion on Stock''s expected constant growth rate
Your posts are moderated
Related Questions
Firm Value: Old School Corporation expects an EBIT of $9,000 every year forever. Old School currently has no debt, and its cost of equity is 18 percent. The firm can borrow at


what are five modern techniques of financial accounting

Select a publicly traded company for which an Accounting and Auditing Enforcement Release (AAER) was published on the U.S. Securities and Exchange Commission (SEC) website at http

The managerial performance measure must be quantitative and the manner in which it is to be calculated should be specified. The managerial performance measure must ideally be linke

Broadway Scripts is a service-type enterprise in the entertainment field, and its manager, Joe Numbers, has only a limited knowledge of accounting. Joe prepared the following balan

Determine balance sheet: Income Statements Year Ended December 31, 20X8   Insure Co. Go-med Co. Sales $3,900,000

Fiscal Policy In a democracy, elected officials of the government create programs for the general welfare of the population. To pay for these programs, the government taxes in

SF is a division of Sell.com, an internet retailer. SF operates two large server farms, each of which is a set of interconnected computers and hard drives that are used to process

FINAL ACCOUNTS As pension funds are set up for a specific purpose, and not for trading, we do not prepare the normal trading profit and loss account or the balance sheet. The p