Opinion of given investor stocks expected return exceeds

Assignment Help Financial Management
Reference no: EM131047379

If in the opinion of a given investor a stock's expected return exceeds its required return, this suggests that the investor thinks

a. management is probably not trying to maximize the price per share.

b. the stock is experiencing supernormal growth.

c. dividends are not likely to be declared.

d. the stock is a good buy.

e. the stock should be sold.

Reference no: EM131047379

Questions Cloud

Constant growth rate-what is current dividend per share : Suppose you know that a company’s stock currently sells for $53 per share and the required return on the stock is 10 percent. You also know that the total return on the stock is evenly divided between a capital gains yield and a dividend yield. If it..
Planning to save for retirement : You are planning to save for retirement over the next 25 years. To do this, you will invest $880 a month in a stock account and $480 a month in a bond account. The return of the stock account is expected to be 10.8 percent, and the bond account will ..
Market interest rate on this type of bond : Pet Food Company bonds pay an annual coupon rate of 7.92 percent. Coupon payments are paid semiannually. Bonds have 14 years to maturity and par value of $1,000. Compute the value of Pet Food Company bonds if the market interest rate on this type of ..
Compute the value of pet food company bonds : Pet Food Company bonds pay an annual coupon rate of 7.92 percent. Coupon payments are paid semiannually. Bonds have 14 years to maturity and par value of $1,000. Compute the value of Pet Food Company bonds if the market interest rate on this type of ..
Opinion of given investor stocks expected return exceeds : If in the opinion of a given investor a stock's expected return exceeds its required return, this suggests that the investor thinks
Forward contract over futures contract for hedging purposes : Give an example each of a situation where you would prefer a futures contract over or forward contract and conversely when you would prefer a forward contract over futures contract for hedging purposes. Give reasons.
What then is the cross rate between francs and pounds : Suppose the exchange rate between U.S. dollars and the Swiss franc is SFr1.4 = $1, and the exchange rate between the dollar and the British pound is £1 = $1.70. What then is the cross rate between francs and pounds? Round your answer to two decimal p..
What is the maximum amount that her retirement plan : Ms. Langley is 30 years old and has begun a retirement plan that permits her to place monthly amounts of $300 into a retirement vehicle, beginning one month from now, for 30 consecutive years. When Ms. Langley reaches her retirement at age 60, she ex..
How many yen would you receive for every peso exchanged : At today's spot exchange rates 1 U.S. dollar can be exchanged for 12 Mexican pesos or for 111.38 Japanese yen. You have pesos that you would like to exchange for yen. What is the cross rate between the yen and the peso; that is, how many yen would yo..

Reviews

Write a Review

Financial Management Questions & Answers

  What is the firms cost of preferred stock

A company's perpetual preferred stock currently sells for $92.50 per share, and it pays an $8.00 annual dividend. If the company were to sell a new preferred issue, it would incur a flotation cost of 5% of the issue price. What is the firms cost of p..

  How much repayment of principal was included

Jan sold her house on December 31 and took a $10,000 mortgage as part of the payment. The 10-year mortgage has a 8% nominal interest rate, but it calls for semiannual payments beginning next June 30. How much repayment of principal was included? How ..

  Show that portfolio beta is weighted sum of the asset beta

Show that portfolio Beta is the weighted sum of the asset beta, where weights are the portfolio (fractional) holding in each asset.

  What is the new exchange rate for the yen

The inflation rate in the U.S. is 3%, while the inflation rate in Japan is 2%. The current exchange rate is $1 equal to 101 Japanese yen. If purchasing power parity condition is existed, what is the new exchange rate for the yen?

  Forecasting process-computed the projects net present value

You have just completed the forecasting process for a new project, and computed the project’s net present value to be ($500,000). You then want to understand the effect on this new project’s net present value of a $500,000 after-tax cash flow increas..

  Determine the short run profit-maximizing price

Determine the short run profit-maximizing price

  What should be paid for overland common stock

Which of the following amounts is closest to what should be paid for Overland common stock? Overland has just paid a dividend of $2.25. These dividends are expected to grow at a rate of 5% in the foreseeable future. The required rate of return is 11%..

  What is terminal cash flow and net present value

Gammy is considering building a facility to manufacture cupcakes to distribute nationally. Your assignment involves both the calculation of cash flows associated with the new investment under consideration and the evaluation of several mutually exclu..

  Analyze two proposed capital investments

Assume that you are the chief financial officer at Porter Memorial Hospital. The CEO has asked to to analyze two proposed capital investments ----Project X and Project Y. Each project requires a net investment outlay of $10,000, and the cost of capit..

  What is amount of instant profit you can make on ex right

Mitsi Inventory Systems, Inc., has announced a rights offer. The company has announced that it will take three rights to buy a new share in the offering at a subscription price of $39. At the close of business the day before the ex-rights day, the co..

  Bonds make annual payments and mature

You bought one of Great White Shark Repellant Co.’s 6.2 percent coupon bonds one year ago for $1,038. These bonds make annual payments and mature 15 years from now. Suppose you decide to sell your bonds today, when the required return on the bonds is..

  Considering the sale of new sound board

Rolston Music Company is considering the sale of a new sound board used in recording studios. The new board would sell for $27,000, and the company expects to sell 1,550 per year. The company currently sells 2,050 units of its existing model per year..

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