True/false True or false? a. All stocks in an equivalent-risk class are priced to offer the same expected rate of return . b. The value of a share equals the PV of future dividends per share.

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Answer 1

Textbook Question

Chapter 4, Problem 1PS

True/false True or false?

a. All stocks in an equivalent-risk class are priced to offer the same expected rate of return.
b. The value of a share equals the PV of future dividends per share.

a)

Expert Solution

Summary Introduction

To discuss: Whether the statement is true or false.

Explanation of Solution

Given statement:

Mostly all the stock which have same equivalent risk are always priced to provide similar expected rate of return.

Justification:

The given statement is true all the stocks which have equivalent risk are priced to provide similar expected rate of mainly the market risk.

Hence, the statement is true.

b)

Expert Solution

Summary Introduction

To discuss: Whether the statement is true or false.

Explanation of Solution

Given statement:

Value of a share is equal to the present value of future dividend per share

Justification:

It is true that value of a share is equal to the present value of future dividend per share

Hence, the statement is true.

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Students have asked these similar questions

The constant growth DCF model used to evaluate the prices of common stocks isconceptually similar to the model used to find the price of perpetual preferred stock or other perpetuities. True or False?

Give the return of the stock in which you would most likely invest and show the preferred order of the stocks if you were considering further investment, all other things being equal. Stock Beta Risk-Free Market-Rate CA-K 0.95 5.5% 9% AU-L 1.05 6% 8.5% TT-M 1.10 5% 8%

a) Share X and Share Y have the following returns with their respective probabilities. Share X Share Y Return Probability Return Probability 10% 0.3 15% 0.35% 0.31% 0.4-4% 0.4-10% 0.3 Calculate the following: i) The expected rate of returns for both shares. ii) The standard deviation for both shares. ii) On a stand-alone basis, select which stock is the riskier..

Answer 2

Textbook Question

Chapter 4, Problem 1PS

True/false True or false?

a. All stocks in an equivalent-risk class are priced to offer the same expected rate of return.
b. The value of a share equals the PV of future dividends per share.

a)

Expert Solution

Summary Introduction

To discuss: Whether the statement is true or false.

Explanation of Solution

Given statement:

Mostly all the stock which have same equivalent risk are always priced to provide similar expected rate of return.

Justification:

The given statement is true all the stocks which have equivalent risk are priced to provide similar expected rate of mainly the market risk.

Hence, the statement is true.

b)

Expert Solution

Summary Introduction

To discuss: Whether the statement is true or false.

Explanation of Solution

Given statement:

Value of a share is equal to the present value of future dividend per share

Justification:

It is true that value of a share is equal to the present value of future dividend per share

Hence, the statement is true.

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Answer 3

Textbook Question

Chapter 4, Problem 1PS

True/false True or false?

a. All stocks in an equivalent-risk class are priced to offer the same expected rate of return.
b. The value of a share equals the PV of future dividends per share.

a)

Expert Solution

Summary Introduction

To discuss: Whether the statement is true or false.

Explanation of Solution

Given statement:

Mostly all the stock which have same equivalent risk are always priced to provide similar expected rate of return.

Justification:

The given statement is true all the stocks which have equivalent risk are priced to provide similar expected rate of mainly the market risk.

Hence, the statement is true.

b)

Expert Solution

Summary Introduction

To discuss: Whether the statement is true or false.

Explanation of Solution

Given statement:

Value of a share is equal to the present value of future dividend per share

Justification:

It is true that value of a share is equal to the present value of future dividend per share

Hence, the statement is true.

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Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 4

Textbook Question

Chapter 4, Problem 1PS

True/false True or false?

a. All stocks in an equivalent-risk class are priced to offer the same expected rate of return.
b. The value of a share equals the PV of future dividends per share.

a)

Expert Solution

Summary Introduction

To discuss: Whether the statement is true or false.

Explanation of Solution

Given statement:

Mostly all the stock which have same equivalent risk are always priced to provide similar expected rate of return.

Justification:

The given statement is true all the stocks which have equivalent risk are priced to provide similar expected rate of mainly the market risk.

Hence, the statement is true.

b)

Expert Solution

Summary Introduction

To discuss: Whether the statement is true or false.

Explanation of Solution

Given statement:

Value of a share is equal to the present value of future dividend per share

Justification:

It is true that value of a share is equal to the present value of future dividend per share

Hence, the statement is true.

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Answer 5

Textbook Question

Answer 6

Textbook Question

Answer 7

a)

Expert Solution

Summary Introduction

To discuss: Whether the statement is true or false.

Explanation of Solution

Given statement:

Mostly all the stock which have same equivalent risk are always priced to provide similar expected rate of return.

Justification:

The given statement is true all the stocks which have equivalent risk are priced to provide similar expected rate of mainly the market risk.

Hence, the statement is true.

b)

Expert Solution

Summary Introduction

To discuss: Whether the statement is true or false.

Explanation of Solution

Given statement:

Value of a share is equal to the present value of future dividend per share

Justification:

It is true that value of a share is equal to the present value of future dividend per share

Hence, the statement is true.

Answer 8

a)

Expert Solution

Summary Introduction

To discuss: Whether the statement is true or false.

Explanation of Solution

Given statement:

Mostly all the stock which have same equivalent risk are always priced to provide similar expected rate of return.

Justification:

The given statement is true all the stocks which have equivalent risk are priced to provide similar expected rate of mainly the market risk.

Hence, the statement is true.

Answer 9

a)

Expert Solution

Answer 10

a)

Expert Solution

Answer 11

Expert Solution

Answer 12

Summary Introduction

To discuss: Whether the statement is true or false.

Answer 13

Explanation of Solution

Given statement:

Mostly all the stock which have same equivalent risk are always priced to provide similar expected rate of return.

Justification:

The given statement is true all the stocks which have equivalent risk are priced to provide similar expected rate of mainly the market risk.

Hence, the statement is true.

Answer 14

b)

Expert Solution

Summary Introduction

To discuss: Whether the statement is true or false.

Explanation of Solution

Given statement:

Value of a share is equal to the present value of future dividend per share

Justification:

It is true that value of a share is equal to the present value of future dividend per share

Hence, the statement is true.

Answer 15

b)

Expert Solution

Answer 16

b)

Expert Solution

Answer 17

Expert Solution

Answer 18

Summary Introduction

To discuss: Whether the statement is true or false.

Answer 19

Explanation of Solution

Given statement:

Value of a share is equal to the present value of future dividend per share

Justification:

It is true that value of a share is equal to the present value of future dividend per share

Hence, the statement is true.

Answer 20

Ch. 4 - True/false True or false? a. All stocks in an...Ch. 4 - Dividend discount model Respond briefly to the...Ch. 4 - Dividend discount model Company X is expected to...Ch. 4 - Dividend discount model Company Y does not plow...Ch. 4 - Constant-growth DCF model Company Zs earnings and...Ch. 4 - Dividend discount model Company Z-prime is like Z...Ch. 4 - Dividend discount model If company Z (see Problem...Ch. 4 - Prob. 8PS Ch. 4 - Prob. 9PS Ch. 4 - Free cash flow Under what conditions does r, a...

True/false True or false? a. All stocks in an equivalent-risk class are priced to offer the same expected rate of return . b. The value of a share equals the PV of future dividends per share.

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