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Review and study the stock market information and stock valuation and selection techniques found in Chapters 5 and 6. Using this information as a foundation:
1. Create three different methods for selecting stocks for investment.
Each method should be based on sound financial criteria using fundamental analysis and have between one and three criteria items. The information needed to use the methods to select stocks must be readily available on yahoo finance or some other public source.
2. Describe each of the three methods. Explain how each of the criteria is financially sound and why the stocks selected using the criteria are expected to beat the market.
3. Select five stocks using each method and create three portfolios. Assume that each portfolio purchases 1 share of each stock.
4. Starting with the closing price as of Friday, February 3, 2012 create a spreadsheet that can be used to track the three portfolios for the remainder of the semester.
An shareholder in Treasury securities expects inflation to be 2.5 percent in Year1,3. 2 percent in Year 2, and 3.6 percent each year thereafter. Assume that the real risk-free rate is 2.75 percent,
If the cost of common equity for the firm is 17.3% the cost of preferred stock is 10.9%, the beforetax cost of debt is 7.9%, and the firm's tax rate is 35%, what is the QM weighted cost of capital?
If the yield on 3-year Treasury bonds equals the 1-year yield plus 2.25%, what inflation rate is expected after Year 1? Round your answer to two decimal places.
Determine the investment's net present value, the internal rate of return, payback period and the discounted payback period. All key assumptions should be specified and explained and an interpretation provided of results for each of the investment c..
The heart of discounted cash flows analysis is the assumptions behind the numbers. Once the mechanics of the tool are mastered, then one needs to focus on the assumptions behind the numbers.
Atomic Electronics is planning instituting a plan whereby managers will be evaluated and rewarded based on a measure of economic value added.
Given these constraints, what percentage of the capital budget must be financed with debt?
Dividends are expected to grow at a constant rate of 4% for the next two years, at which point the stock is expected to sell for $56.00. If investors require a rate of return on Modem's common stock of 18%, what should the stock sell for today?
The company just paid a $1.48 annual dividend and announced plans to pay $1.54 next year. The dividend growth rate is expected to remain constant at the current level. What is the required rate of return on this stock?
The Anderson Pipe Co. just paid an annual dividend of $3.75 and is expected to grow at 8% for the forseeable future. Harley Bevins generally demands a return of 9% when he invests in companies similar to Anderson.
Discuss and explain the situations under which financial leverage is beneficial vs. when it is harmful. Is there a point at which it is beneficial from some stakeholders' point of view but not beneficial from other stakeholders view point?
Why does the cost of equity increase with an increased use of debt in the capital structure?
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