Answer:
The 1-year HPR for the first stock is 16.18%
Explanation:
The computation is shown below:
For investment 1 -
The formula is shown below:
= (Income × quarter ) +Value at the end - Value at the beginning ÷ (Value at the beginning) × 100
= {($0.38 × 2) + $29.25 - $25.83} ÷ ($25.83) × 100
= ($0.76 + $29.25 - $25.83) ÷ ($25.83) × 100
= ($4.18 ÷ $25.83) × 100
= 16.18%
Answer:
P₀ = $12.23
Explanation:
Div₃ = $1.25
Div₄ = $1.65
Div₅ = $2.178
Div₆ = $2.30868
first we must calculate the terminal value using the dividend discount model = $2.30868 / (17% - 6%) = $20.988
now we must discount all the future dividends + terminal value
P₀ = $1.25/1.17³ + $1.65/1.17⁴ + $2.178/1.17⁵ + $20.988/1.17⁵ = $12.23
Answer:
The indifference policy advocates that dividends are irrelevant.
Explanation:
The indifference Policy holds that that dividends do not add value to a company’s stock price.
According to this theory, investors do not need to concern themselves with a company's dividend policy since they have the option to sell a portion of their portfolio of equities if they want cash.
This school of thought believes that a company’s declaration and payment of dividends should have little to no impact on the stock price.
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