Required rate of return and stock price for ibm stock

Assignment Help Finance Basics
Reference no: EM1332900

By walking you through a set of financial data for IBM, this assignment will help you better understand how theoretical stock prices are calculated; and how prices may react to market forces such as risk and interest rates. You will use both the CAPM (Capital Asset Pricing Model) and the Constant Growth Model (CGM) to arrive at IBM's stock price. To get started, complete the following steps.

1. Find an estimate of the risk-free rate of interest, krf. To obtain this value, go to Bloomberg.com and use the U.S 10 year treasury bond rate as the risk free rate.

2. Download this IBM stock info. Please note that the following info contained in this document must be to complete the subsequent questions
IBM beta
IBM current annual dividend
IBM 3 year dividend growth rate
Industry P/E
IBM EPS

3. With the info you now have, use the CAPM to calculate IBM's required rate of return.

4. Use the CGM to find the current stock price for IBM

Reference no: EM1332900

Questions Cloud

Design code form a program in visual basic.net 2003 : design code form a program in Visual Basic.net 2003.
General environment elements affecting companies : Discuss the general environment elements that are affecting the companies in the industry (coffee industry).
Comprising a list and description of the tools organizations : Comprising a list and description of the tools organizations can use to manage risk in international finance.
Researching criminal justice reports : Discuss methods used to conduct research during criminal justice reports.
Required rate of return and stock price for ibm stock : Find out an estimate of the risk-free rate of interest, krf. To obtain this value, go to Bloomberg.com and use the U.S 10 year treasury bond rate as the risk free rate.
Woman who anticipates comprise a large family takes a job : A woman who anticipates comprise a large family takes a job with a firm that offers exceptional child care benefits.
Assume both the spot rates unexpectedly shift downward : Assume both the spot rates unexpectedly shift downward by 1%. What is the price of a forward contract otherwise identical to yours.
Explain using technology to fit e-business goals : Explain Using technology to fit E-business goals and When conducting business and businesses must first determine how technology and e-business will help the company operate more efficiently
What kind of employee information will the organization need : What kind of employee information will the organization need to give to the concerned government agencies and Which HR function is responsible for collecting information related to a deceased or injured employee?

Reviews

Write a Review

 

Finance Basics Questions & Answers

  Financial reporting and analysis

Finance is about Gunns Ltd, a company in dealing with forestry products in Australia. The company has also been listed in Australian Stock Exchange. As many companies producing forestry products, even Gunns Ltd is facing various problems. Due to the ..

  A report on financial accounting

This report is specific for a core understanding for Financial Accounting and its relevant factors.

  Describe the types of financial ratios

Describe the types of financial ratios and other financial performance measures that are used during venture's successful life cycle.

  Differences between sole proprietorship and corporation

Briefly describe the major differences between a sole proprietorship and a corporation

  Prepare a cash budget statement

Calculate the expected value of the apartment in 20 years' time. What is the mortgage loan repayment at the beginning of each month

  What are the implied interest rates

What are the implied interest rates in Europe and the U.S.?

  State pricing theory and no-arbitrage pricing theory

State pricing theory and no-arbitrage pricing theory

  Small business administration

Identify the likely stage for each venture and describe the type of financing each venture is likely to be seeking and identify potential sources for that financing.

  Effect of financial leverage

The Effect of Financial Leverage and working capital management

  Evaluate the basis for the payment to the lender

Evaluate the basis for the payment to the lender and basis for the payment to the company-counterparty.

  Importance of opps, ipps, mpfs and dmepos

Research and discuss the differences and importance of : OPPS, IPPS, MPFS and DMEPOS.

  Time value of money

Time Value of Money project

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