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3 years ago

True or false: all investments eventually increase in value if held long enough.

1 answer:

4 0

All investments eventually increase in value if held long enough. False.
Securities fraud, also known as a stock fiddle and investment fraud, is a deluding practice in the stock or commodities markets that bring investors to have purchase or sale decisions on the basis of false information, frequently resulting in loses, in violation of ammunition constitution.

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You consider buying a share of stock. The stock is expected to pay a dividend of $1.50 next year, and dividends are expected to

masya89 [10]

Question

The question is incomplete. The complete question is given as follows:

You consider buying a share of stock. The stock is expected to pay a dividend of $1.50 next year, and dividends are expected to grow by 5% per year forever. What is the stock price now if the stock's beta is 1.1, rf is 6%, and E[rm] = 16%.

Answer

Stock price = $12.5

Explanation:

Using the dividend valuation model, the value of a stock can be determined using this model:

Price = D(1+g)/(r-g)

D- dividend payable now, g- growth rate in dividend, r-return on equity

Return on equity

Re= Rf + β(Rm -Rf)

Rf- risk-free rate, Rm - Return on market portfolio, β- Beta factor

To determine the Stock price we follow the steps below

Step 1

Determine the cost of equity

r = 6% + 1.1 *(16%-6%)

= 17%

Step 2

Determine the stock price

Stock price = 1.50/(0.17-0.05)

= $12.5

Stock price = $12.5

Note

D*(1+g) = Dividend next year. And this has been given as $1.50. So there is no need to apply the growth rate.

7 0

3 years ago

Suppose that Italy and Austria both produce fish and shoes. Italy’s opportunity cost of producing a pair of shoes is 5 pounds of

Alexus [3.1K]

Answer:

Section 1..... Italy has a comparative advantage in the production of shoes, and Austria has a comparative advantage in the production of fish.

Section 2.... 5 pounds of fish, ; 1/10 pairs of shoes

Section 3..... A and C.

Explanation:

The comparative advantage is known to be a term that is in use in the economic world,where a country or company has the ability of producing goods at extremely lower cost compared to that of its partners or competitors.

This is very important because, the country or company will be able to produce its goods by making use of fewer resources.

And thereby gives the country or company an edge in selling its goods at a reasonable lower price when compared with that of its competitors.

In this case, it is summarized or concluded that, Italy has a lower opportunity cost of producing shoes. So, Italy has a comparative advantage in shoes and Sweden has a comparative advantage in fish.

4 0

3 years ago

When preparing a statement of cash flows using the indirect method, each of the following should be classified as an operating c

pogonyaev

Answer:

C. Proceeds from the disposal of a long-term asset with no gain or loss.

Explanation:

Operating activities: it involves those transactions that after net income written impact the working capital. It would subtract the rise in current assets and a reduction in current liabilities, while adding the decline in current assets and an increase in current liabilities.

It would adjust the changes in working capital. In addition, the depreciation expense adds to the net revenue. And the loss on asset sales is added, while the gain on asset sales is deducted

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4 years ago

?khokho's coffee house was the first company to introduce flavored coffee in the global market. it sells coffee in several diffe

LuckyWell [14K]

The answer to this question is "product invention". Kho Khao's coffee house is currently involved in product invention when it is the first coffee house that introduced a flavored coffee locally and in the global market. It also sells coffee in several and different flavors such as blueberry, cinnamon, and cranberry. It was based on the flavors preferred in the target country.

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3 years ago

Why should you start saving early?

AveGali [126]

The sooner you begin saving, the the more time your money has to grow.

5 0

3 years ago

Read 2 more answers