PRIN.OF CORPORATE FINANCE
13th Edition
ISBN: 9781260013900
Author: BREALEY
Publisher: RENT MCG
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Textbook Question
Chapter 4, Problem 4PS
Stock quotes Go to finance.yahoo.com and get trading quotes for IBM.
- a. What is the latest IBM stock price and market cap?
- b. What is IBM’s dividend payment and dividend yield?
- c. What is IBM’s trailing P/E ratio?
- d. Calculate IBM’s forward P/E ratio using the EPS
forecasted by analysts for the next year. - e. What is IBM’s price–book (P/B) ratio?
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The attached file contains hypothetical data for working this problem. Goodman Corporation’s and Landry Incorporated’s stock prices and dividends, along with the Market Index, are shown in the file. Stock prices are reported for December 31 of each year, and dividends reflect those paid during the year. The market data are adjusted to include dividends.
The risk-free rate on long-term Treasury bonds is 8.04%. Assume that the market risk premium is 6%. What is the expected return on the market? Now use the SML equation to calculate the two companies' required returns.
The table below shows your stock positions at the beginning of the year, the dividends that each stock paid during the year, and the stock prices at the end of the year.
Company
Shares
Beginning of Year Price
Dividend Per Share
End of Year Price
Johnson Controls
750
$
74.91
$
1.57
$
86.92
Medtronic
650
59.57
0.81
55.51
Direct TV
900
26.94
26.39
Qualcomm
600
45.08
0.59
40.92
What is your portfolio dollar return and percentage return? (Round your answers to 2 decimal places.)
Portfolio Return
Dollar return
Percentage return
%
The following table shows your stock positions at the beginning of the year, the dividends that each stock paid during the year, and the stock prices at the end of the year.
Company
Shares
Beginning ofYear Price
Dividend Per Share
End of Year Price
Johnson Controls
550
$73.11
$1.21
$86.02
Medtronic
400
57.77
0.45
53.71
Direct TV
700
25.14
24.59
Qualcomm
100
43.28
0.41
39.12
What is your portfolio dollar return and percentage return? (Round your answers to 2 decimal places.)
Portfolio Return
Dollar return: ____.__
Percentage return: _____.__%
Chapter 4 Solutions
PRIN.OF CORPORATE FINANCE
Ch. 4 - Stock markets True or false? a. The bid price is...Ch. 4 - Stock quotes a. I would like to sell 1000 shares...Ch. 4 - Stock quotes Here is a small part of the order...Ch. 4 - Stock quotes Go to finance.yahoo.com and get...Ch. 4 - Valuation by comparables Look up P/E and P/B...Ch. 4 - Dividend discount model True or false? a. All...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 - Prob. 11PSCh. 4 - Constant-growth DCF model Pharmecology just paid...Ch. 4 - Prob. 13PSCh. 4 - Cost of equity capital Under what conditions does...Ch. 4 - Cost of equity capital Each of the following...Ch. 4 - Two-stage DCF model Company Z-prime is like Z in...Ch. 4 - Two-stage DCF model Consider the following three...Ch. 4 - Two-stage DCF model Company Qs current return on...Ch. 4 - Two-stage DCF model Compost Science Inc. (CSI) is...Ch. 4 - Growth opportunities If company Z (see Problem 10)...Ch. 4 - Growth opportunities Alpha Corps earnings and...Ch. 4 - Prob. 24PSCh. 4 - Prob. 25PSCh. 4 - Prob. 26PSCh. 4 - Horizon value Suppose the horizon date is set at a...Ch. 4 - Valuing a business Permian Partners (PP) produces...Ch. 4 - Valuing a business Construct a new version of...Ch. 4 - Valuing a business Mexican Motors market cap is...Ch. 4 - Valuing a business Phoenix Corp. faltered in the...Ch. 4 - Constant-growth DCF formula The constant-growth...Ch. 4 - DCF valuation Portfolio managers are frequently...Ch. 4 - Valuing a business Construct a new version of...
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