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Aneli [31]
3 years ago
5

The risk-free rate of return is 4%, the required rate of return on the market is 10%, and High-Flyer stock has a beta coefficien

t of 2.0. If the dividend per share expected during the coming year, D1, is $4.60 and g = 6%, at what price should a share sell? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
Business
1 answer:
Bess [88]3 years ago
3 0

Answer:

the share should sell at $46

Explanation:

We use the CAPM method to know the required return of the capital

Ke= r_f + \beta (r_m-r_f)

risk free 0.04

market rate 0.1

beta(non diversifiable risk) 2

Ke= 0.04 + 2 (0.06)

Ke 0.16000 = 16%

Now we calculate with the dividends grow model the intrinsic value of the share:

\frac{divends}{return-growth} = Intrinsic \: Value

\frac{4.60}{0.16-0.06} = Intrinsic \: Value

$4.6/0.1 = $46

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What are some pros and cons to using a credit card?
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Explain how abstraction allows for the creation of increasingly complex systems. reference top-down design strategy in your resp
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Answer:  
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4 0
3 years ago
Samantha works as a marketing manager for a cosmetics manufacturer. She plans to suggest a specific type of business model that
galina1969 [7]

<em>A) Franchise is a business model Samantha have in mind.</em>

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Explanation:

Franchise is the business model which is adopted by many business organisation for the purpose of business expansion. Where the other new business holders carry out the business using the company's procedure, brand name etc.

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8 0
3 years ago
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A ten-year, inflation-indexed bond has a par value of $10,000 and annual coupon rate of 5 percent. During the first six months s
Anvisha [2.4K]

Answer:

The correct answer is option (B).

Explanation:

According to the scenario, the given data are as follows:

Par value of bond = $10,000

Coupon rate Annual = 5%

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5 0
3 years ago
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