Question

a stock currently sells for $30 per share and pays $1.00 per year in dividends. what is an investor's valuation of this stock if he expects it to be selling for $37 in one year and requires a 12 percent return on equity investments?

Answer 1

An investor's valuation of this stock if he expects it to be selling for $37 in one year and requires a 12 percent return on equity investments would be $33.93.

Valuation of stock: 0.12 = ( 37 - P + 1 )/P

= 1.12P = 38. So, P = $33.93

An equity investment is a cash put into a business through the purchase of its stock on the stock exchange. On a stock exchange, these shares are typically traded.

Private equity investments, preferred shares, retained earnings, and equity mutual funds are a few examples of equity investments. A variety of advantages, including risk diversification, straightforward transfer, profitability, and simple monitoring, come with an equity investment.

To learn more about Equity investments visit: brainly.com/question/28191214

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