bullish trend  upper cap  blue chip stock  efficient market  inside tranding dividend yield  capital gain

Q: Discuss whether the director’s view (Miss Kay) that issuing traded bonds will decrease the weighted…

A: Weighted average cost of capital is the average cost of procuring funds from various sources such as…

Q: If the debt component in the capital structure is predominant –

A: Debt: It is a part of the capital structure that involves bonds, loans, etc. Introducing debt to the…

Q: The cost of equity capital for non-dividend paying stocks can be determined by ____. I. using the…

A: CAPM = Risk free Rate + Beta * Market Risk Premium As per Dividend Discount Model,Ke = (D1/P0) +…

Q: n is it appropriate to use the dividend valuation models, such as the Zero Growth Model, constant…

A: Dividend discount model is used or valuation of the companies and quite used frequently.

Q: A class of Efficient Market Hypothesis that implies all public information is calculated into a…

A: Efficient Market Hypothesis is the market theory which depicts that market is generally efficient…

Q: QUESTION 24 All of the following methods may be used to determine the cost of equity capital…

A: Cost of equity is the required return for investor who are invested money in a equity capital.

Q: Which of the following statements is FALSE of the dividend-discount model Pn= Dn+1/(r-g)? a. The…

A: Dividend discount model is indeed the method of valuation which tends to value the stock based on a…

Q: Which of the following statements are true and which are false? o). High breakeven points in capital…

A: o). High breakeven points in capital intensive industries are desirable. True

Q: Which of the following statement is most correct? The cost of capital for internal common stocks is…

A: “Since you have asked multiple question, we will solve the first question for you. If you want any…

Q: True or False: The efficient markets hypothesis holds only if all investors are rational. False…

A: The efficient markets hypothesis holds only if all investors are rational. Answer:- True; Because in…

Q: The company tend to raise financial capital through selling stocks in the secondary markets. Select…

A: There are two market one is primary market and other is secondary market.

Q: _________________ are stocks that provide value to investors by companies reinvesting their profits…

A: Investment is done in stocks based on the investment goals of the investor. Conservative investors…

Q: Compared to top-down investing, bottom-up investing: A) focuses on macro economic issues. B) focuses…

A: Bottom-up investing "focuses on macroeconomic issues".

Q: analyst is trying to determine the intrinsic value of a certain share. Which of the following is…

A: To find out the intrinsic value o the stock there two methods one is dividend discount model and…

Q:

A: Arbitrage trading is an investment strategy in financial markets where a trader buys and sells an…

Q: Diversification works because: Select one: a. Portfolios have higher returns than individual assets.…

A: Diversification A strategy adopted for risk management. The allocation of the resource in the…

Q: investors

A: Introduction: Dividend is defined as a share in the profits of the company that is paid by the…

Q: ndicate whether the following statements are true or false.   a. Investors prefer diversified…

A: Hello. Since your question has multiple sub-parts, we will solve first three sub-parts for you. If…

Q: multible choice, In applying the constant-growth dividend model, increasing the market…

A: Constant growth dividend model = D1/(ke-g)

Q: Assuming that the required rate of return is determined by the CAPM, explain how you would usethe…

A: Given: The required rate of return is determined by the CAPM and the dividend growth model to…

Q: how do the upward trend and downward trend of share price(stock price changes) relates to the market…

A: Market Efficiency - A market is efficient when such  market is characterized by perfect and…

Q: Match the following ✓ A premium over and above the risk-free rate. A. Financial Leverage ✓ The…

A: Answer -   Match the Following : Particulars   A premium over and above the risk free rate C.…

Q: The suitable model to value a firm that has consistent earnings growth, but varies how it pays out…

A: Total Payout model If you want to value a firm that has consistent earnings grow, but varies how it…

Q: A dividend valuation model such as the following is frequent. where: Pi = the current price of…

A: A dividend valuation model is given in question is a constant growth model which assume that…

Q: Compare and contrast constant growth model and zero growth model in stock valuation. Support your…

A: The Constant Growth Model is commonly known as the Gordon Growth model that is used to calculate the…

Q: The constant growth model: i.      Assumes that dividend income will increase at a consistent rate…

A: The Constant Growth Model is a technique for valuing stocks. It is also known as the Gordon Growth…

Q: Match the following A premium over and above the risk-free rate. ✓ The computed cost of capital…

A: Based on the defination we need to match the following.

Q: The dividend discount model is used by most equity analysts to determine a stock’s intrinsic value.…

A: The Dividend discount model: First propounded by Myron. J. Gordon and Eli Shapiro in 1956, the…

Q: The cost of equity capital for non-dividend paying stocks can be determined by ____. I. using the…

A: CAPM = Risk free Rate + Beta * Market Risk Premium

Q: Which of the following statements is most likely FALSE? A. We should use the general dividend…

A: The dividend discount model values a company by discounting the future dividends. The present value…

Q: ased on the dividend growth model. If you exepect the market rate of return to inclease across the…

A: The dividend growth model is used to value the firm using the data of dividends. It assumes that the…

Q: True or False: The following statement accurately describes how firms make decisions related to…

A: When company requires funds, it will use retained earnings present in the company. If they are not…

Q: discuss the critical issues invlove in implementing the dividend growth model approach and the…

A: Critical issue with “Dividend Growth Model Approach”: Dividend Growth Model is utilized to value an…

Q: Dividend changes may be used by management as a credible communication tool to signal investors…

A: “Hey, since there are multiple questions posted, we will answer first question. If you want any…

Q: Define each of the following terms:a. Target payout ratio; optimal dividend policyb. Dividend…

A: Target payout ratio; optimal dividend policy: A target payout ratio is a percentage of a company's…

Q: The beta risk of a share reflects the sensitivity of cash flow, earnings, and the share price to…

A: The beta of a stock or portfolio tells us how sensitive our holdings are to systematic risk.…

Q: Apart from using PE ratio, what is another way of valuing the stock price? if we have the EPS, Share…

A: Price earning ratio is used to value a company's share price. It is calculated by dividing the…

Q: Which one of the followings is incorrect regarding to cost of equity:     On average, it is higher…

A: Hi There, Thanks for posting the questions. As per our Q&A guidelines, must be answered only one…

Q: firm’s cost of equity, cost of debt, and cost of capital when the firm increases the amount of debt…

A: Note : As per the guidelines, only first question will be answered. Kindly post the remaining…

Q: Which of the following will increase the price of a stock? Group of answer choices: A. Decrease in…

A: The required rate of return refers to the minimum return a speculator will acknowledge for claiming…

Q: If a firm uses a conservative financial plan, It will usually have marketable securities at the…

A: Conservative investment prefers to conserve one's purchasing power of capital with a small amount of…

Q: The recommended model to estimate the cost of common equity for a firm is Select one: a. a…

A: Capital structure refers to the blend that is used by an organization to finance its overall…

Q: Stock Price A (Beta) B (Risk Free Rate) C (DIV) D (Growth rate of Dividends) E (Expected Rate of…

A: Dividend discount model ia simply based on an assumption that the theoretical stock price = Present…

Q: Which statement is false regarding the Capital Asset Pricing Model?

A: CAPM Return Formula: Expected Return= Rf+ β(Rf- Rm) where,            Rf is Risk free return…

Risk and return

Before understanding the concept of Risk and Return in Financial Management, understanding the two-concept Risk and return individually is necessary. 

Capital Asset Pricing Model

Capital asset pricing model, also known as CAPM, shows the relationship between the expected return of the investment and the market at risk. This concept is basically used particularly in the case of stocks or shares. It is also used across finance for pricing assets that have higher risk identity and for evaluating the expected returns for the assets given the risk of those assets and also the cost of capital.