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
Elina [12.6K]
3 years ago
9

If d0 = $1.75, g (which is constant) = 3.6%, and p0 = $40.00, what is the stock's expected total return for the coming year?

Business
2 answers:
Orlov [11]3 years ago
4 0

Answer:

The answer is <u>"a. 8.13%".</u>

Explanation:

Given that;

d0 = $1.75

p0 = $40.00

g = 3.6% = 0.036

By using the formula;

Price of the stock = (Dividend this year)(1+g) ÷ (r - g)  

By putting the values;

40 = (1.75)(1+0.036) ÷ (r - 0.036)

r - 0.036 = (1.75)(1.036) ÷ 40

r - 0.036 = 1.813 ÷ 40

r - 0.036 = 0.045325

r = 0.045325 + 0.036

r = 0.081325 = 0.081325 x 100

<u>r = 8.13%</u>

Aliun [14]3 years ago
4 0

Is known;

d0 = $ 1.75

p0 = $ 40.00

g = 3.6% = 0.036

Asked:

the expected total stock return for the coming year?

Answer:

By using a formula;

Share price = (Dividend this year) (1 + g) ÷ (r - g)

By placing values;

40 = (1.75) (1 + 0.036) ÷ (r - 0.036)

r - 0.036 = (1.75) (1,036) ÷ 40

r - 0.036 = 1,813 ÷ 40

r - 0.036 = 0.045325

r = 0.045325 + 0.036

r = 0.081325 = 0.081325 x 100

r = 8.13%

So, the expected total stock return for the coming year is 8.13%.

<h2>Further Explanation </h2>

The rate of return is the expected return obtained in the future, while the risk is defined as the uncertainty of the expected return.

Risk is the possibility of a deviation from the average of the expected rate of return that can be measured from the standard deviation using statistics.

To measure relative risk the coefficient of variation is used, which describes the risk per unit of return expected as indicated by the magnitude of the standard deviation divided by the expected level of return.

The relationship between risk and return is:

  1. linear or unidirectional.
  2. The higher the rate of return, the higher the risk.
  3. The greater the assets that we place in investment decisions, the greater the risks that arise from these investments.
  4. Linear conditions are only possible in normal markets.

If you invest in speculative stocks (or any stock), you take risks in the hope of getting a large return.

The risk on an asset can be analyzed in two ways:

  1. Stand-alone, where the assets are considered separately.
  2. Based on the number of portfolios, where the asset is considered as one of several assets in the portfolio.

Learn more

definition of The rate of return brainly.com/question/12465558

definition of Risk brainly.com/question/12465558

Details

Grade: High School

Subject: Business

keywords: The rate of return

You might be interested in
Some of the following future cash flows have been expressed in then-current (future) dollars and others in CV dollars. Use an in
Cloud [144]

Answer:

$62,267.91

Explanation:

first we must calculate the interest rate = 10% + 6% + (10% x 6%) = 16.6%

now we can use the present value formula:

present value = future value / (1 + rate)ⁿ

present values for:

  • cash flow year 0 = $17,100
  • cash flow year 3 = $46,500/1.166³ = $29,333.06
  • cash flow year 4 = $12,300/1.166⁴ = $6,654.43
  • cash flow year 7 = $26,900/1.166⁷ = $9,180.42

total present value = $62,267.91

6 0
3 years ago
Read 2 more answers
Lena invested her savings in two investment funds. The $6000 that she invested in Fund A returned a 6% profit. The amount that s
Nostrana [21]

Answer:

The amount that Lena will invest in fund B would be $4000.

Explanation:

Given information -

Amount invested in fund A - $6000

Return earned on fund A - 6%

Let us assume amount invested in fund B be x

Return earned on fund B - 1%

Return on both funds together - 4%

Let us assume the total amount of fund invested be ($6000 + x)

Now using simple equation , we will take out the value of x which is the amount invested in fund B -

$6000 X 6% + x X 1% = 4% ( $6000 + x )

= $360 + .01 x = $240 + .04 x

= $360 - $240 = .04 x - .01 x

$120 = .03 x

x = $120 / .03

= $4000.

4 0
3 years ago
How did speculative investing weaken the stability of the stock market
Lena [83]
The main way in which speculative investing weakened the stability of the stock market was that it it led to high overvaluation of a company's worth, meaning that people began to divest quickly, leading to a run on the banks. 
7 0
3 years ago
Somebody report all my post thank you ‍♀️ I wanted everything deteled !!!!
iren [92.7K]
I’m sorry to hear that
7 0
3 years ago
Mathematics for Business and Finance
Marina CMI [18]

Answer:

Explanation:

Apply first discount to original price

apply next discount to discounted price

etc

8 0
3 years ago
Other questions:
  • The direct exchange of goods and services for other goods and services is known as
    14·1 answer
  • Island Breeze Company designs and makes desk, window, and ceiling fans. In a product liability suit based on negligence, Island
    11·1 answer
  • Which of the following would shift the supply of dollars in the market for foreign-currency exchange of the open-economy macroec
    15·1 answer
  • If the prepaid rent account before adjustment at the end of the month has a debit balance of $2,800, representing a payment made
    5·1 answer
  • Universal Containers (UC) uses a legacy Employee portal for their employees to collaborate. Employees access the portal from the
    7·1 answer
  • News reporters broadcast constant footage of an accident that occurred at a
    14·1 answer
  • Lori Nichols started an engineering firm, Engineering Enterprises P.C. During its first month of operations, the following trans
    5·1 answer
  • Canniff Air uses two measures of activity, flights and passengers, in the cost formulas in its budgets and performance reports.
    15·1 answer
  • 7. The idea that business demand comes from a demand for consumer goods is referred to as
    11·1 answer
  • I need q 4 and 5 please:)
    9·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!