User Account

All Pages

Calculate the one-year holding-period return on GT stock

Assignment Help Financial Management
Reference no: EM13848196

You are researching GT inc stock. You have assembled the following information and assumptions.

Current Assumptions:

Current share price = $15.90

Your Estimate of GT's intrinsic value is $17.25

Over the course of one year, you expect the misprice of GT to be fully corrected, you forecast additional price appreciation of $1.22 per share over the course of the year as well as the payment of a cash dividend of $.50

T-bills rate = 3.2%, Market beta = 1.2, Size beta = .5, value beta = .2, equity premium = 4.5, size premium = 2.7, value premium = 4.3

Answer the following questions:

1. State whether GT shares are overhauled, fairly valued, or undervalued, based on your forecast.

2. Calculate the one-year holding-period return on GT stock.

3. Calculate the expected ALPHA for GT stock.

Reference no: EM13848196

Questions Cloud

Evaluation team with enough information : The aim of this activity is to provide the evaluation team with enough information as to determine if the topic chosen is both appropriate and doable.
What is present value of the annuity : What is the present value of the following annuity? $1,021 every half year at the beginning of the period for the next six years, discounted back to the present at 8.93 percent per year, compounded semi annually?
What is the total reportable gross income from all sources : The Sandler family consists of two married adults, and two teenagers. Mr. and Mrs. Sandler will file their IRS return as a joint return. What is the total reportable gross income from all sources? After they put $5600 into qualified retirement plan a..
Issue of state of hawaii general obligation bonds : Examine the tombstone announcing the issue of State of Hawaii general obligation bonds (page 5). All of these bonds are being issued in 1983. However, their maturities vary from 3 years to 20 years. All bonds pay interest semi-annually. What is the y..
Calculate the one-year holding-period return on GT stock : You are researching GT inc stock. You have assembled the following information and assumptions. State whether GT shares are overhauled, fairly valued, or undervalued, based on your forecast. Calculate the one-year holding-period return on GT stock. C..
What stressors exist in the case study : What stressors exist in the case study? Consider stressors related to family, occupation, and health. How is stress measured? What are the psychological, biological, and social coping resources that can be used to decrease stress
Retirement plan-assume that laverty currently has no savings : Retirement Plan: Professor Laverty wants to retire to the mountains as soon as possible. However, he would like to accumulate some savings before he retires. Assume that Laverty currently has no savings, but he is willing to start saving $2,500 per m..
What would the annual yield to maturity be on the bond : Sweet Fruit Inc has a $1000 par value bond that is currently selling for $1280. It has an annual coupon rate of 9.90 percent paid semi annually and has ten years remaining until maturity. What would the annual yield to maturity be on the bond if you ..
What some major concerns you had regarding milgram study : Review Argosy's IRB Checklist. Gather information on Stanley Milgram's study on obedience and authority. Using the IRB checklist as a guideline, what were some major concerns you had regarding the Milgram study

Reviews

Write a Review

Financial Management Questions & Answers

  Net present value of a project that has initial cash outflow

What is the net present value of a project that has an initial cash outflow of $12,670 and the following cash inflows? The required return is 11.5%

  Find the price of a gallon of paint and that of a brush

Jack works in the hardware section of a department store. A customer comes in and buys 3 gallons of paint and 7 brushes, and pays $69.96, including 6% sales tax. Another customer buys 2 gallons of paint and 3 brushes and pays $42.40, including sales ..

  Real risk-free rate is expected to remain

The real risk-free rate is expected to remain at 3 percent. Inflation is expected to be 3 percent this year, and 4 percent next year. The maturity risk premium is estimated to be equal to 0.1%(t - 1), where t = the maturity of a bond (in years).

  Inventory ordering policy

Why might a manager be forced to use simulation instead of an analytical model in dealing with a problem of inventory ordering policy

  What is the initial weighted average cost of capital

Marginal cost of capital (LO5) The McGee Corporation finds it is necessary to determine its marginal cost of capital. McGee’s current capital structure calls for 40 percent debt, 5 percent preferred stock, and 55 percent common equity. What is the in..

  Net present value of a series of cash flows

Which element should NOT be taken into account when determining the net present value of a series of cash flows?:

  Calculate the after-tax cost of debt

Calculate the after-tax cost of debt and what is LL's after-tax cost of debt? Round the answer to two decimal places

  Defined benefit pension funds-mutual funds

A clearly understood investment policy statement is not critical for which one of the following? Defined benefit pension funds. Mutual funds

  Assume that the price of the car stays constant

You've been saving up for a new car that you think costs $25,000. You already have $10,000 and you think that, with interest and additional savings, the $10,000 will grow to $20,000 in three years. Suddenly, the phone rings and a voice at the other e..

  What should strike it rich management do

The Strik-it-Rich Gold Mining Company is contemplating expanding its operations. To do so it will need to purchase land that its geologists believe is rich in gold. Strik-it-Rich’s management believes that the expansion will allow it to mine and sell..

  What is its after-tax cost of debt

Micro Spinoffs, Inc., issued 20-year debt a year ago at par value with a coupon rate of 5%, paid annually. Today, the debt is selling at $1,120. If the firm’s tax bracket is 30%, what is its after-tax cost of debt? (Do not round intermediate calculat..

  What is the maximum amount of cash that the global satellite

Global Satellite Corp. reported net sales of $450 million last year and generated a net income of $99 million. Last year's accounts receivable increased by $14 million. What is the maximum amount of cash that the Global Satellite Corp. received from ..

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!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd