Investors expect the stock to sell for at the end of year

Assignment Help Financial Management
Reference no: EM131054583

A share of stock is now selling for $140. It will pay a dividend of $7 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 17%

Reference no: EM131054583

Questions Cloud

When creating bond investment strategy : When creating a bond investment strategy, one should consider his: investment goal; investment horizon; risk tolerance; tax status; all of the above
Which stock carries more total risk-market risk : Suppose you estimate that eBay’s stock has a volatility of 30% and a beta of 1.45. A similar process for UPS yields a volatility of 35% and a beta of 0.79. Which stock carries more total risk? Which has more market risk? calculate the equity cost of ..
The central bank will typically withdraw liquidity : The central bank will typically withdraw liquidity when it desires a drop in interest rate. The central bank will typically add liquidity when it desires a rise in interest rate. The central banks purchases securities, mostly government bonds, to inj..
What is the effective annual yield and current yield : PK Software has 9 percent coupon bonds on the market with 25 years to maturity. The bonds make semiannual payments and currently sell for 111.75 percent of par. What is the current yield on PK's bonds? What is the effective annual yield?
Investors expect the stock to sell for at the end of year : A share of stock is now selling for $140. It will pay a dividend of $7 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 re..
Stock is expected to pay a constant dividend in perpetuity : The market price of a security is $36. Its expected rate of return is 11%. The risk-free rate is 4%, and the market risk premium is 9%. What will the market price of the security be if its beta doubles (and all other variables remain unchanged)? Assu..
Butterfly trade : Butterfly trade is: (a) Investing the same amount in long term bonds in a rolling period; (b) Buying short-term and long-term bonds and short intermediate-term bonds; (c) Mimicking the portfolio of a bond index; (d) Buying under-priced bonds using va..
What is the company days sales in receivables : A company has net income of $185,000, a profit margin of 8.4 percent, and an accounts receivable balance of $124,370. Assuming 70 percent of sales are on credit, what is the company’s days’ sales in receivables?
Without commission or transfer fees : If you want to buy a six (6) year STRIP quoted at BID 90.490, ASK 90.544, to earn a yield of 5%, what price per $100 of face value (without commission or transfer fees) would you pay? 5. If the same STRIP was available to you for $735.00 per $100 of ..

Reviews

Write a Review

Financial Management Questions & Answers

  Write a report to measure tracking error of the passive fund

measure the tracking error of the passive fund with the selected index as benchmark. Your passive fund has an objective to track a selected index.

  In the lease versus buy decision leasing often preferable

In the lease versus buy decision leasing often preferable

  Risk-free zero coupon bond with face value

Stock A is a non-dividend paying stock, and at time 0 (that is t=0) it has a spot price of $24. At the same time, a risk-free zero coupon bond with face value 1,000 and maturity 3 year has a price of 789.

  The return on foreign bond is the sum of the yield

The return on a foreign bond is the sum of the yield over the holding period plus any capital gain/loss, plus currency gain/loss. A short hedge involves selling futures contracts to cover the risk on a position in the spot market.

  About the monthly discount rate

You need a new car and the dealer has offered you a price of $20,000, with the following payment options: (a) pay cash and receive a $2000 rebate, or (b) pay a $5000 down payment and finance the rest with a 0% APR loan over 30 months. But having just..

  How would you measure diversification between funds

Respond to the following client statement: a prospective client comes into your office looking for investment advice. The client feels that s/he is appropriately diversified because the portfolio currently holds six different growth mutual funds, hen..

  Analyze the balance sheet and income statement

Analyze the balance sheet, income statement and statement of cash flows for the company. Your analysis should be two paragraphs in length

  Yield to maturity-what is the duration of this bond

A bond currently sells for $1,050, which gives it a yield to maturity of 6%. Suppose that if the yield increases by 25 basis points, the price of the bond falls to $1,025. What is the duration of this bond?

  Lower internal rate of return and profitability index

Why is it possible for investments to have a higher net present value than a competing investment but still have a lower internal rate of return and profitability index than that competitor?

  Pitiful rate of interest you will receive on this account

Suppose you open a regular savings account at Bank of America. Go to their website and look up the pitiful rate of interest you will receive on this account. To avoid the $5 monthly fee, begin with a balance of $300 today. And then suppose you save $..

  Capital budgeting criteria

Capital budgeting criteria: ethical considerations An electric utility is considering a new power plant in northern Arizona. Power from the plant would be sold in the Phoenix area, where it is badly needed. Because the firm has received a permit, the..

  Dividend has been consisting of a growth rate

Inc. dividend has been consisting of a growth rate of 5.75% a year and at this rate the dividend next year will be $1.55. If the stock is currently selling at $45, what is the required rate of return on the stock?

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