Question 14.14. What should be the current price of a share of stock if a $5 dividend was just paid, the stock has a required return of 20%, and a constant dividend growth rate of 6%? Question 17.17. What is the variance of return of a three-stock portfolio (each stock being equally weighted) that produced returns of 20%, 28%, and 30%? Question 21.21. What is the coupon rate of a bond which has a price of $1100, Yield to Maturity of 14%, matures in 5 years and makes semi-annual coupon payments? Question 15.15. The book value of a firm’s equity is determined by: multiplying share price by shares outstanding.multiplying share price at issue by shares outstanding.the difference between book values of assets and liabilities.the difference between market values of assets and liabilities. Question 16.16. What is the approximate standard deviation of returns if over the past 4 years an investment returned 8.0%, -12.0%, -12.0%, and 15.0%?
Dividend Valuation
Dividend refers to a reward or cash that a company gives to its shareholders out of the profits. Dividends can be issued in various forms such as cash payment, stocks, or in any other form as per the company norms. It is usually a part of the profit that the company shares with its shareholders.
Dividend Discount Model
Dividend payments are generally paid to investors or shareholders of a company when the company earns profit for the year, thus representing growth. The dividend discount model is an important method used to forecast the price of a company’s stock. It is based on the computation methodology that the present value of all its future dividends is equivalent to the value of the company.
Capital Gains Yield
It may be referred to as the earnings generated on an investment over a particular period of time. It is generally expressed as a percentage and includes some dividends or interest earned by holding a particular security. Cases, where it is higher normally, indicate the higher income and lower risk. It is mostly computed on an annual basis and is different from the total return on investment. In case it becomes too high, indicates that either the stock prices are going down or the company is paying higher dividends.
Stock Valuation
In simple words, stock valuation is a tool to calculate the current price, or value, of a company. It is used to not only calculate the value of the company but help an investor decide if they want to buy, sell or hold a company's stocks.
Question 14.14. What should be the current price of a share of stock if a $5 dividend was just paid, the stock has a required return of 20%, and a constant
Question 17.17. What is the variance of return of a three-stock portfolio (each stock being equally weighted) that produced returns of 20%, 28%, and 30%?
Question 21.21. What is the coupon rate of a bond which has a price of $1100, Yield to Maturity of 14%, matures in 5 years and makes semi-annual coupon payments?
Question 15.15. The book value of a firm’s equity is determined by: multiplying share price by shares outstanding.multiplying share price at issue by shares outstanding.the difference between book values of assets and liabilities.the difference between market values of assets and liabilities.
Question 16.16. What is the approximate standard deviation of returns if over the past 4 years an investment returned 8.0%, -12.0%, -12.0%, and 15.0%?
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
