How do stock prices vary with the following: 1. the expected growth rate of dividends (earnings); 2. the benchmark (risk-free) interest rate: 3. the equity premium

Q: what is the return of stock a what is the return of stockb what is the standard deviation on stock…

A: Given: tate Probability(P) Return A Return B Poor 40% -0.08 -0.15 Normal 35% 0.19 0.14 Good…

Q: What rate of return can stockholders expect to receive on retained earnings?

A: Stockholders can expect returns more than its WACC on retained earnings.

Q: Which of the following variables is NOT used to explain stock returns in the Fama-French…

A: The term stock refers to the equity shares of a company that can be issued for the purpose of…

Q: How does preferred stock differ from bothcommon equity and debt? Is preferred stock morerisky than…

A: Difference between equity stock and preference stock: Both equity shares and preference shares…

Q: Based on the dividend growth model, what are the two components of a stock’s rate of return?

A: Formula: Rate of return = Expected dividendCurrent stock price + Growth rate

Q: What does the rate of return on common stock show, and how is it calculated?

A: Rate of return on the common stock: It signifies the amount of net income that has been retained for…

Q: Common stock has par value, and market value. Explain briefly these values. Which one is most…

A: Par value of common stock : Par value corresponds to the equity valuation specified in the corporate…

Q: How would you use the dividend yield model to value the price of a stock if it presently does not…

A: Answer: Dividend discount model is used to valuate a stock that is expected to pay future dividends.…

Q: How do you calculate price earnings ratio, given the stocks historical prices?

A: Price earnings ratio is ratio of price per share and earning per share. PE ratio=Price per…

Q: How can I calculate CF or (dividends + buyback) in Implied equity risk premium? (By example of…

A: Implied ERP is calculated by first calculating the Return on Equity using constant dividend growth…

Q: Point-and-figure charts attempt to identify reversals in the direction of stock prices over time.

A: Hi, since there are multiple questions posted, as per guidelines we will answer the first question.…

Q: According to the weak-form efficient market hypothesis, which of the following types of information…

A: WEAK FORM EFFICIENT MARKET HYPOTHESIS: ALL PAST DATA ARE REFLECTED IN THE PRICES OF THE STOCK.

Q: n the formula ke >= (D1/P0) + g, what does (D1/P0) represent? Select one: a. The expected…

A: ke = Required return D1=Expected dividend P0=Current price  g = Growth rate

Q: Discuss how changes in the general stock and bond markets could lead to changes in the required rate…

A: Required rate of return- is the minimum rate of return which an investor expects in return  for a…

Q: Explain required rate of return on stock

A: The required rate of return is the minimum acceptable rate of return that an investor expects to…

Q: Is the following equation correct for finding the value of a constant growth stock? Explain.

A: Price of stock can be found from the constant growth model of dividend discount method.

Q: ________ is a model for determining the price of a stock, based on a future series of dividends that…

A: The price of a stock can be determined by the present value of dividends paid in the future.

Q: Explain realized rate of return on stock

A: Realized Rate of Return on stock gives you the percentage return on holding the stock for a certain…

Q: What is meant by the dividend yield on a common stock investment?

A: Not all the tools of fundamental analysis work for every investor on every stock.  For dividend…

Q: What are three main issues that must be dealt with when evaluating stocks with the dividend growth…

A: Three main issues that must be dealt with while evaluating the stock with dividend growth model is…

Q: The "stock valuation model" referred to in the questions below relate to the whether the fundamental…

A: Stock valuation models: Residual income approach- Under this approach, the intrinsic value of a…

Q: The return of stock B is __% The volatility of stock A is __% The volatility of stock B is __%

A: Thank you for posting questions. Since you have posted multiple questions, as per the guideline I am…

Q: How do you calculate dividend yield for stock?

A: dividend yield is the ration of dividend paid by the firm divided by price of share of the firm.

Q: Define actual rate of return on stock

A: Actual rate of return on stock

Q: What are the arithmetic and geometric returns for the stock?

A: Arithmetic and Geometric mean are used to calculate the expected mean of the stock Arithmetic Mean…

Q: Explain how to find the value of a stock given itslast dividend, its expected growth rate, and…

A: A model that helps to evaluate the value of the stock with the assumption that the dividend will…

Q: The broad stock market's P/E ratio (the inverse of its earnings yield) tends to rise as treasury…

A: With increase in yield on the treasury will increase the earning expectation of the market and…

Q: Explain which has a stronger effect on stock prices, the change in the interest rate or the…

A: Stock is one of the major securities issued by the companies and an important financial indicator…

Q: When using discounted dividend method to estimate stock price, which of the following should be used…

A: When using discounted dividend method to estimate stock price, used required return of equity as…

Q: How to calculate market price range of common stock?

A: Market price per share: A market price per share is total value of company divided by number of…

Q: What is the expected return on the firms stock

A: Here, Proportion of Debt is 75% Proportion of Equity will be (1-75%) = 25% Cost of Debt is 5% Risk…

Q: How do stock repurchases affect the EPS and ROE ratios?

A: Ratio analysis: The analysis of a company using the financial ratios and comparing its trends and…

Q: How does the current price of a stock depend on its own past values, as well as the current and past…

A: Market index of stock gauges the stock market which assists investors to analyze the market…

Q: Use the following information on states of the economy and stock returns to calculate the expected…

A: An expected return is calculated by multiplying potential outcomes by the there probabilities

Q: Assume that the expected inflation rate has just been revised upward by the market. Would the…

A: The required rate of return is the return received by an investor at a minimum acceptable rate. It…

Q: What effect do increasing inflation expectations have on the required returns of investors in common…

A: Inflation: it is increase in the price of most of the goods and services.

Q: How to calculate selling price, markups, markdown, stockturn rate, and return on investment.

A: Financial Ratio: A financial ratio, or bookkeeping proportion, is the general size of two chosen…

Q: The price-earnings ratio of a company tells how the company determines the price of common stock…

A: "Since you have posted multiple questions, we have solved the first question for you. To get it…

Q: Which of the following is NOT used by analysts to value stocks? * P/E Ratio O P/ Assets Ratio O…

A: RELATIVE VALUATION Relative valuation involves comparing ratio multiples of a company with other…

Q: which is the return on the risk capital, includes stock price appreciation plus dividends received…

A: which isthe return on the risk capital, includes stock price appreciation plusdividends received…

Q: What determines the price-earnings ratio for a stock?

A: The price earring ratio is one of the most widely-used ratios by investors and analysts to determine…

Q: How does one calculate the capital gains yield and the dividendyield of a stock?

A: Capital gain yield: The capital gain yield mainly refers to the increase in the security’s price,…