Answer:
The stock price is $31.14
Explanation:
The value of Brickhouse stock today is the present values of future cash flows from the stock discounted using the required rate of return of 10.7% as the discount rate as done below:
Years cash flows discount factor Present values
1 $2.85 1/(1+10.7%)^1=0.903342367 $2.57
2 $2.34 1/(1+10.7%)^2=0.816027432 $1.91
3 & beyond *$32.67 1/(1+10.7%)^2=0.816027432 $ 26.66
total present values= $31.14
* the year 3 and beyond represents the terminal value of the stock,which is computed using the formula below
=D2*(1+g)/r-g
D2 is the year dividend of $2.34
g is the dividend growth rate of 3.3%
r is the required rate of return which 10.7%
terminal value=$2.34*(1+3.3%)/(10.7%-3.3%)
=2.41722
/0.074
=$32.67
Answer:
The bonds are guaranteed as to principal and interest payments by the US government.
Explanation:
According to NASAA's Statement of Policy on Unethical or Dishonest Business Practices of Broker-Dealers and Agents, a broker can say US government bonds are guaranteed on principal and interest payments.
However if inflation sets in and interest rates rises there is no guarantee from the government that interest paid on the bonds will match the higher interest rate.
So legally this statement is correct, even though the investor can lose money as a result of higher interest rate in the future.
Answer:
Option (C) is correct.
Explanation:
Consumer income is one of the main determinant of demand. Consumer income is related with the demand of normal and inferior good.
If there is an increase in the income of a consumer then as a result the demand for a normal good increases and shifts the demand curve rightwards.
If there is a fall in the income of the consumer then as a result the demand for a normal good also decreases and shifts the demand curve leftwards.
Alternatively, the consumer income is inversely related with the demand for inferior goods.
Answer:a. Total common stock issued is 750 millions
b. In treasury is 109 million
c. Outstanding 750 million.
Explanation:
Issued shares referred to the total amount of authorised shares that has been issued to the public for subscription.
Treasury stock refers to parts of the issued stock that are held up for the ownership of the issuing company.
Outstanding stock refers to the total number of stock issued and fully paid for from the issued stock.
