What is the price expected one year from now

Assignment Help Financial Management

Reference no: EM131209394

Assume that the equilibrium return on a financial instrument is 10 percent. If the current price is $100 and the instrument does not pay interest or dividend, what is the price expected one year from now when the market is in equilibrium?

If the equilibrium return on the instrument increases to 15 percent because the instrument is perceived as more risky, what happens to the current price, assuming the expected price one year from now does not change?

Reference no: EM131209394

Questions Cloud

Find companys return on equity using the dupont technique : HP and DELL Taking the information from the Income statements and the Balance sheets, calculate the company's return on equity using the DuPont technique for the company for three years. Show your calculation!

Examples of improvements to support : Also, give your opinion on whether the increase in reporting requirements has improved investors' and creditors' confidence in corporations. Provide at least two (2) specific examples of improvements to support your opinion.

What will happen to the current price : If the current price is $100 and the expected future price one year from now just increased from $110 to $120, what will happen to the current price?

Calculate free cash flow : Purchase of short-term investments 4,570Sale of short-term investments (450) 6,320The firm made interest payments of $1,430 million and received $780 in interest receiptsfrom T-bills that it held. The tax rate is 35 percent. Calculate free cash fl..

What is the price expected one year from now : If the current price is $100 and the instrument does not pay interest or dividend, what is the price expected one year from now when the market is in equilibrium?

Identify one change you would recommend to the sec reporting : Identify one change you would recommend to the SEC reporting requirement for publically traded companies and discuss how it would affect financial reporting.

Describe the company internal and external stakeholders : Describe the expansion project, the country in which the expansion will take place, and the reasoning behind this expansion into this country at this particular time. In other words, why does this particular project and country make sense for your..

How the fluctuation in return is eliminated : Show how the fluctuation in return is eliminated if an investor splits his or her surplus funds equally between HappyDays and SadDays.

List two services that fis provide to the public : List two services that FIs provide to the public. - Why do intermediaries provide these ser vices? What is a contingent financial claim?

User Account

All Pages