To determine: The total percentage return, the dividend yield and the
Introduction:
Total return refers to the total income from an investment. The total income includes the periodic incomes and the increase or decrease in the value of an asset.
Percentage return refers to the returns stated as a percentage. Percentage returns determine the returns per one dollar of investment or per $100 worth of investment.
Dividend yield refers to the percentage of the initial price of a share received as a dividend.
Capital yield refers to a change in the value of an investment stated in terms of percentage.
To determine: The capital gain yield.
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Essentials of Corporate Finance (Mcgraw-hill/Irwin Series in Finance, Insurance, and Real Estate)
- Suppose rRF = 4%, rM = 11%, and bi = 1.6. A. What is ri, the required rate of return on Stock i? Round your answer to one decimal place. % B. 1. Now suppose rRF increases to 5%. The slope of the SML remains constant. How would this affect rM and ri? Both rM and ri will decrease by 1 percentage point. Both rM and ri will remain the same. Both rM and ri will increase by 1 percentage point. rM will remain the same and ri will increase by 1 percentage point. rM will increase by 1 percentage point and ri will remain the same. C. Now suppose rRF decreases to 3%. The slope of the SML remains constant. How would this affect rM and ri? Both rM and ri will remain the same. Both rM and ri will decrease by 1 percentage point. rM will decrease by 1 percentage point and ri will remain the same. rM will remain the same and ri will decrease by 1 percentage point. Both rM and ri will increase by 1 percentage point. D. 1. Now assume that rRF remains at 4%, but rM increases to 12%.…arrow_forwardSuppose rRF = 4%, rM = 11%, and bi = 1.5. What is ri, the required rate of return on Stock i? Round your answer to two decimal places. % 1. Now suppose rRF increases to 5%. The slope of the SML remains constant. How would this affect rM and ri? Both rM and ri will decrease by 1%. Both rM and ri will remain the same. Both rM and ri will increase by 1%. rM will remain the same and ri will increase by 1%. rM will increase by 1% and ri will remain the same.arrow_forwardConsider the following for a firm. Its stock price (P0) is at $50, its payout ratio (POR) is 0.4, its EPS1 is $2.00, and investor required return is 10%.. What is the percent of capital gains?DONOT SOLVE ON EXCEL USE PROPER FORMATEarrow_forward
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- Find the share price given the following information. The setup here is all correct, but the answer should be $66.61 per share. What am I doing wrong? Discount rate (Ke) = 10%.arrow_forwardD3) When firms increase their debt-equity ratio, we find: Group of answer choices The ROE always falls. The EPS always rises. Swings in return of equity (ROE) are smaller. Swings in earnings per share (EPS) are magnified.arrow_forwardSuppose Stock X just paid a dividend (D0) of $2. The required return is 12%. Find the price of the stock when the growth rates are as follow: 0% 5% 10% 15%, Comment on your results, especially for part 4.arrow_forward
- Cornerstones of Financial AccountingAccountingISBN:9781337690881Author:Jay Rich, Jeff JonesPublisher:Cengage Learning