Calculate the average stock return from 2005–2007, the standard deviation and coefficient of variation over this period. The market price of the stock was $31 at year-end 2004, $35 at year-end 2005, $42 at year-end 2006, and $55 at year-end 2007

Financial Reporting, Financial Statement Analysis and Valuation
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ISBN:9781285190907
Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Publisher:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Chapter11: Risk-adjusted Expected Rates Of Return And The Dividends Valuation Approach
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1. Calculate the average stock return from 2005–2007, the standard deviation and coefficient of variation over this period.

The market price of the stock was $31 at year-end 2004, $35 at year-end 2005, $42 at year-end 2006, and $55 at year-end 2007.

For valuation purposes, industry experts use the dividend valuation model to value the common equity interest of industry firms.

Potential investors’ required rate of return for this firm is 14 percent; growth rate is 13 percent for 2010 and 2011, and then declines to 12 percent for all later years.

Market Returns: The stock returns for the market as a whole were as follows: 15.7 percent in 2005, 8.2 percent in 2006, and 12.1 percent in 2007

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