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VARVARA [1.3K]
3 years ago
8

Stocks A and B have the following data. The market risk premium is 6.0% and the risk-free rate 6.4%. Assuming the stock market i

s efficient and the stocks are in equilibrium, does stock A has higher dividend yield than Stock B? A B Beta 1.10 0.90 Constant growth rate 7.00% 7.00% Provide detailed explanation
Business
1 answer:
scoray [572]3 years ago
4 0

Answer:

Yes, Stock A has higher dividend yield

Explanation:

given data

market risk premium = 6.0%

risk-free rate = 6.4%

                                                       A                                        B

Beta                                                1.10                                    0.90

Constant growth rate                    7 %                                     7%

to find out

does stock A has higher dividend yield than Stock B

solution

we get here Stock A rA = 6.4% + 1.1 × 6%

Stock A rA  = 13.00%

and

Dividend yield of stock A = rA - g

Dividend yield of stock A = 13.00% - 7%

Dividend yield of stock A  = 6%

and

for Stock B rB = 6.4%+ .9 × 6%

Stock B rB = 11.80%

and

Dividend yield of stock B = rA - g

Dividend yield of stock B  = 11.80% - 7%

Dividend yield of stock B = 4.80%

so we can say Yes, Stock A has higher dividend yield

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Answer:

$19,002.77

Explanation:

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where,

Sales revenue is

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6 0
3 years ago
1. All of the factors below create a change in demand for alcohol except: a. Change in cigarette prices given that cigarettes an
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Answer:

d. Rise in price of alcohol

Explanation:

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Rise in price of Alcohol leads to 'Change [Expansion] in Quantity Demanded' due to price change [rise] .

5 0
3 years ago
Common stocks have less security than ______________ stock, but it also has greater potential for reward.
Yuri [45]

Your answer is, Preferred.

<h3><u>What is a Preferred Stock</u></h3>

Preferred stock is a component of share capital that may have any combination of features not possessed by common stock, including properties of both an equity and a debt instrument, and is generally considered a hybrid instrument.

<h3><u>Impact of a Preferred Stock</u></h3>

Companies that offer preferred shares instead of issuing bonds can accomplish a lower debt-to-equity ratio. That allows them to gain significantly more future financing from new investors. A company's debt-to-equity ratio is one of the most common metrics used to analyze the financial stability of a business.

<h3><u>The 5 types of Preferred Stock</u></h3>
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Thus, <u>option c</u> is your answer.

Learn more about a Preferred Stock here: brainly.com/question/18068539

6 0
3 years ago
You are the manager of a movie theater that is the only one in a local market, so you have strong market power. You have extensi
Gre4nikov [31]

Answer: b. Set higher prices to the students as their demand is relatively more inelastic.

Explanation:

Price elasticity of demand measures the change in quantity demanded to changes in price levels.

If demand is inelastic, a small change in price has a small effect on quantity demanded. An inelastic demand usually has a coefficient of less than 1.

The elasticity of demand for students and senior citizens are both inelastic but that of the students is greater than that of senior citizens. They are less responsive to price changes when compared with senior citizens.

7 0
3 years ago
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cestrela7 [59]
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