CORPORATE FIN.(LL)-W/ACCESS >CUSTOM<
CORPORATE FIN.(LL)-W/ACCESS >CUSTOM<
11th Edition
ISBN: 9781260269901
Author: Ross
Publisher: MCG CUSTOM
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Chapter 10, Problem 2CQ

Investment Selection Given that Transocean was down by about63 percent for 2014, why did some investors hold the stock? Why didn’t they sell out before the price declined so sharply?

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Horse and Buggy Inc. is in a declining industry. Sales, earnings, and dividends are all shrinking at a rate of 5% per year. a. If r = 10% and DIV1 = $6, what is the value of a share? (Do not round intermediate calculations. Round your answer to 2 decimal places.) b. If r = 10% and DIV1 = $6, What price do you forecast for the stock next year? (Do not round intermediate calculations. Round your answer to 2 decimal places.) c. If r = 10% and DIV1 = $6, What rate of return should you expect if you buy the stock today and sell it in one year? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.).
The common stock of Manchester & Moore is expected to earn 14 percent in a recession, 7 percent in a normal economy, and lose 4 percent in a booming economy. The probability of a boom is 15 percent while the probability of a recession is 5 percent. What is the expected rate of return on this stock? I need the step by step calculation not using excel sheet pls. Thank you.
Last year's return on equilty was 30%. This yeaar the ROE has decreased by 25%  even though the firm's earnongs equaled last year's earnings. The firm has no preferred stock. What equity percentage cause the decrease?

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