Would you recommend buying or selling stock

Assignment Help Finance Basics

Reference no: EM131959117

Question: A company recently paid a dividend of $1.45. You expect dividends to grow at a rate or 5% for 1 year, and then level off to 3.5% per year, forever. The company's shares have a correlation with the market of 0.8. The standard deviation of the market is 3.4% and the standard deviation of the stock is 2.5%. The return on T'bills is 3% and the market risk premium is 5%.

a. What would you be willing to pay for this stock today?

b. If the stock is selling in the market for $80, would you recommend buying or selling it? Explain.

Reference no: EM131959117

Questions Cloud

What amount would nic record as a leased asset : On January 1, 2016, National Insulation Corporation (NIC) leased office space under a capital lease. Lease payments are made annually.

Calculate the final molarity of zinc cation in the solution : Suppose 0.348 g of zinc iodide is dissolved in 150. mL of a 28.0 mM aqueous solution of potassium carbonate.

Design and implement your cisco packet tracer network : Use the following Network Diagram (Figure I -see Page 2) to design and implement your Cisco Packet Tracer Network.

Calculate the number of fluoride ions : After all his studying, he was confident that he could calculate the number of fluoride ions. Can you?

Would you recommend buying or selling stock : A company recently paid a dividend of $1.45. You expect dividends to grow at a rate or 5% for 1 year, and then level off to 3.5% per year, forever.

Calculate the split-adjusted annual return : Use this information to adjust the data in the table and calculate the split-adjusted annual return on the investment in Cyberdyne shares.

First reactant on the left in equation : The table of standard enthalpies of formation to find ?H for the following reactions: Express your answers in kJ/mol of the first reactant on the left

Examine the cultural and communication issues : MOD003313 - Business Communications - Report explaining the cultural and communication issues that may have caused the breakdown in communication

What is the total amount of interest revenue that will be : Borrowed $115,200 for eight years. Will pay $6,100 interest at the end of each year and repay the $115,200 at the end of the 8th year.

User Account

All Pages