Log in
Finance
1
answer
0
watching
171
views

a) Mikalanga Ltd is experiencing a period of rapid growth. earnings and dividens per share are expected to grow at a rate of 18% during the the next two years, 15% in the third year and a constant rate of 65 thereafter. mikalanga\s last dividend, which jas just been paid was k1.15. if the required rate of return on the stock is 12%, what is the price of a share of the stock today?

b) A stock has a beta of 1.8. a security analyst who specialises in studying this stock expects its return to be 18%. suppose the risk free rate is 5% and the market risk premium is 8%. is the analyst pessimistic or optimistic abot this stock elative to the markets expectations?

Watch
1
answer
0
watching
171
views

For unlimited access to Homework Help, a Homework+ subscription is required.

Trinidad Tremblay
Trinidad TremblayLv2
28 Sep 2019

Unlock all answers

Get 1 free homework help answer.
Already have an account? Log in
Share

Related questions

8.

The common stock of Eddie's Engines, Inc. sells for $37.43 a share. The stock is expected to pay $3.40 per share next year. Eddie's has established a pattern of increasing their dividends by 5.5 percent annually and expects to continue doing so. What is the market rate of return on this stock?

18.09 percent

6.56 percent

9.08 percent

14.58 percent

11.01 percent

9.

The Bell Weather Co. is a new firm in a rapidly growing industry. The company is planning on increasing its annual dividend by 18 percent a year for the next 4 years and then decreasing the growth rate to 3 percent per year. The company just paid its annual dividend in the amount of $1.80 per share. What is the current value of one share of this stock if the required rate of return is 7.30 percent?

$85.39

$83.59

$74.05

$63.06

$72.25

12. The risk-free rate of return is 4.4 percent and the market risk premium is 14 percent. What is the expected rate of return on a stock with a beta of 1.6?

10.52 percent

26.80 percent

21.04 percent

13.40 percent

22.40 percent

Simpkins Corporation does not pay any dividends because it is expanding rapidly and needs to retain all of its earnings. However, investors expect Simpkins to begin paying dividends, with the first dividend of $0.50 coming 3 years from today. The dividend should grow rapidly - at a rate of 50% per year - during Years 4 and 5. After Year 5, the company should grow at a constant rate of 6% per year. If the required return on the stock is 16%, what is the value of the stock today (assume the market is in equilibrium with the required return equal to the expected return)? Round your answer to the nearest cent. Do not round your intermediate computations.

$

Crisp Cookware's common stock is expected to pay a dividend of $1.5 a share at the end of this year (D1 = $1.50); its beta is 1.10. The risk-free rate is 5.4% and the market risk premium is 4%. The dividend is expected to grow at some constant rate gL, and the stock currently sells for $46 a share. Assuming the market is in equilibrium, what does the market believe will be the stock's price at the end of 3 years (i.e., what is )? Do not round intermediate steps. Round your answer to the nearest cent.

$

Hi, giving points to help me with these questions :


1.The correlation coefficient between well diversified portfolio A (50 different assets) and well diversified portfolio B (50 different assets) is -.7.

A new portfolio of A and B together will be less risky than a portfolio that is composed of either just the assets in Portfolio A or just the assets in portfolio B.

AnswerTrue or False





2.Plastics, Inc. will pay an annual dividend of $1.85 next year. The company just announced that future dividends will be increasing by 2.25 percent annually. How much are you willing to pay for one share of this stock if you require a 16 percent return?


True or False



3.Assume that common stock values are consistent with the following model:

E(Rx) = rf + Bx{E(Rm)- rf)}

E(Rx) = required return on asset x.

rf = risk free rate of interest

Bx = Beta of security x.

E(Rm) = expected return on market portfolio.

E(Rm)- rf = market risk premium

4.If the risk free rate of interest increases but the required risk premium for security x remains the same; the expected return on security x be less than the required return on security x until the price of security x falls.

Answer

True or False



5.Which one of the following is the best example of unsystematic risk?

A.Inflation exceeding market expectations

Answer A.Inflation exceeding market expectations

B.A Warehouse fire

C.Decrease in the value of the dollar

D.Decrease in value of the dollar

E.Increase in Consumer spending

Weekly leaderboard

Home
Homework Help 3,900,000
Finance 370,000
Start filling in the gaps now
Log in