1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
sesenic [268]
2 years ago
6

A share of stock with a beta of 0. 75 currently sells for $50. Investors expect the stock to pay a year-end dividend of $2. The

1 year t-bill currently sells for $961. 54, and the historic return on the market is 11%, the historic risk free rate is 4%. If the stock is perceived to be fairly priced today, what must be investors’ expectation of the price of the stock at the end of the year?.
Business
1 answer:
Rama09 [41]2 years ago
3 0

Expected price next year = $62.58

Beta is 0.75, PO is $50, D1 is $2, RF is 11%, and RM is 4%.

Where,

Expected Dividend = D

Po = Price as of today.

Risk-free Rate is Rf.

Market risk premium is Rm.

g = rate of growth

Equity cost is Rf plus beta minus Rm.

Equity cost is 11% plus 0.75 and 4%.

Equity cost = 3.33%

Making use of the Dividend Discount Model to Estimate Growth Rate

(D1/P0) + g = ke

(2/50) + g = 3.33%

0.04 + g= 3.33%

g = 3%

Expected price for the following year = $2*1.033/ (0.03-0.033)

Expected price next year = $62.58

What is Expected price?

As its name suggests, predicted price level is a forecast that takes into account accurate evaluation of pertinent economic data to foretell what will happen with those goods and services in the future. Making changes to this level when new information becomes available is essential because unknowable factors may become real over time.

To learn more about Expected price visit:brainly.com/question/19169084

#SPJ4

You might be interested in
James would like to create a sole proprietorship operating under the name Super
Sever21 [200]

Answer:

James will need to register the business with his local state as the

name of his business differs from his own.

Explanation:

5 0
3 years ago
Task _____ is the characteristic of a job that refers to how predictable job duties are from one day to the next.
Nataliya [291]

Answer:

variability

Explanation:

When a worker is performing a task, he or she might come across a situation that is not expected or a situation not experienced before. Task variability enables the prediction of certain tasks, especially where those task are standardized and repetition of such reduces task variability.

Also, any exceptions experienced when carrying out a duty either in a new situation or at any stage in the value creation process, such would eventually make task variability high. In other words, take variability refers to the numbers of exceptions, a worker experienced when carrying out a duty.

8 0
4 years ago
Consider the following scenario:
Helen [10]

Answer: 1. Charities

2. Government action the only viable solution

Explanation:

Externalities are the resultant additional effects that are experienced by others as a result of actions by an economic agent who does not bear the extra aformentioned cost or benefit that their actions bring about.

1. Private Solutions to Externalities include any solution independent of the government.

The above Private Solution is Charities because it was a Non-profit Environmental Organization that dealt with the lobbying for the reduction to be acted upon by state agents. These types of organisations are usually Charities.

2. If it is shown that the potential gains are viewed to be quite high as in this case then negotiating with the polluters might not work. In this case Government Intervention is needed to force the polluters to adhere to rules and regulations.

8 0
4 years ago
What were working conditions like before the labor movement?
Ivan
Im not sure, sorry, I wish I could help
8 0
3 years ago
Which of the following debit and credit rules is​ correct? A. Decreases in assets and liabilities are credited. B. Increases in
Andrei [34K]

Answer:

B. Increases in liabilities and​ stockholders' equity are credited.

Explanation:

As Liabilities and Stockholder's equity have credit balance, so a credit entry will increase their value and debit entry will decrease its balance. On the other hand assets accounts have debit balance, a credit entry will decrease its balance and debit entry will increase it. So the correct option is B. Increases in liabilities and​ stockholders' equity are credited.

6 0
3 years ago
Other questions:
  • Considering contributing $1,000 to their church. This contribution will bring their total itemized deductions to $2,000. Assumin
    5·1 answer
  • Bonita Wolfe purchased a media system for her home which included a television for $1,398.77, a computer for $895.60, surround s
    8·2 answers
  • The following is a partial trial balance for the Green Star Corporation as of December 31, 2018: Account Title Debits Credits Sa
    11·1 answer
  • When borrowing money to purchase a car, what is one way to lower your monthly payments?
    7·1 answer
  • Consulting firms are frequently characterized according to whether their primary skill is strategic planning or tactical analysi
    5·1 answer
  • Consider a $1000 bond that pays an annual interest rate of 8% and matures in two years. The prevailing interest rate has dropped
    12·1 answer
  • ) Cebrex Software began a new development project in 2020. The project reached technological feasibility on June 30, 2021, and w
    7·2 answers
  • Without prejudice to your solution to part (a), assume that you computed the June 30, 2020, inventory to be $60,480 at retail an
    8·1 answer
  • Delectable, Inc.'s unadjusted trial balance includes Accounts Receivable of $10,000; Allowance for Doubtful Accounts of $50 cred
    7·1 answer
  • 3. Once you turn 18, you should regularly check your credit report...
    13·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!