Answer:
b. $35.02
Explanation:
The first dividends will be calculate by multiplying by the grow rate and bring them to present value:
first year:
D0 x (1+g)
1.75 x 1.13 = 1.977500
Then we calcualte the present value:
1.9775/1.12 = 1.7656
second year:
D1 x (1+g)
1.9775 x (1.13) = 1.7656
PV: 1.7814
Finally,, we calcualte the present value of the next dividends using the dividend grow model
We calcualte next year dividneds:
D2 x (1+g) = D3
1.9775 x 1.06 = 2.368650
g = 6%
and return 12%
39.47749167
then, we calcualte the present vale:
PV = 31.4712
Finally, we add all these values
1.7656 + 1.7814 + 31.4712 = 35,0182 = 35.02
This will be the estimate current stock price.
Answer:
False.
Explanation:
An attractive industry are not one that is characterized by high entry barriers, suppliers and buyers with strong bargaining power, low threats from substitute products, and low rivalry among firms.
An industry is defined by a group of firm that produce good and service, which are close subtitute and bargaining power of supplier are not considered as entry barrier to a firm in the open market. Industry with high fixed cost can pose high degree of rivalry among firm.
Answer:
The correct answer is E) None of the above.
Explanation:
when you purchase a straddle on euros, this means you simultaneously buy a call option and a put option on the same common stock on euros bearing a similar expiration date, and the same place where the security can be bought and sold. What this means is, you tend to make a profit once the common stock makes a sharp move. Normally, call options give investors the liberty to sell stock expecting a rise in price, while a put option gives the investors want to sell their stock because they predict a fall in price. These two option contracts aim at making investors make profits.
Answer:
$29.71
Explanation:
Value of Stock can be determine by Dividend Valuation method.
Dividend Valuation method is used to value the stock price of a company based on the dividend paid, its growth rate and rate of return. The price is determined by calculating present value of future dividend payment.
In this question the Dividend payment is $2, growth rate is 4% and required rate of return is 11%.
Formula for Valuation:
Value of Share = Dividend (1 + g) / (Rate of return - Growth rate)
Value of Share = $2.00 (1 + 4%) / (11% - 4%)
Value of Share = $2.00 (1.04) / 7%
Value of Share = $29.71
