The Digital Electronic Quotation System (DEQS) Corporation pays no cash dividends currently and is not expected to for the next five years. Its latest EPS was $19.50, all of which was reinvested in the company. The firm’s expected ROE for the next five years is 15% per year, and during this time it is expected to continue to reinvest all of its earnings. DEQS’s Price Earnings Ratio is 5 and its market capitalization rate is 26% per year. At the beginning of Year 2, DEQS’s market price is $ 150 per share. Is this stock a better long purchase for your portfolio or a sale or a short ?? AND WHY ?

The Digital Electronic Quotation System (DEQS) Corporation pays no cash dividends currently and is not expected to for the next five years. Its latest EPS was $19.50, all of which was reinvested in the company. The firm’s expected ROE for the next five years is 15% per year, and during this time it is expected to continue to reinvest all of its earnings. DEQS’s Price Earnings Ratio is 5 and its market capitalization rate is 26% per year. At the beginning of Year 2, DEQS’s market price is $ 150 per share. Is this stock a better long purchase for your portfolio or a sale or a short ?? AND WHY ?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter7: Common Stock: Characteristics, Valuation, And Issuance

Section: Chapter Questions

Problem 18P

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