Suppose you have some extra money to invest for 1 year. After a year, you will need to sell your investment to pay tuition. Aft

Question

4 years ago

9

Suppose you have some extra money to invest for 1 year. After a year, you will need to sell your investment to pay tuition. Aft

er listening to Bloomberg, you decide that you want to buy Intel Corp. stock. You call your broker and find that Intel is currently selling for $ 50.09 per share and pays $ 0.15 per year in dividends. The analyst on Bloomberg predicts that the stock will be selling for $ 60.50 in 1 year. Assume that you would be satisfied to earn 11.8 % on the stock. Should you buy this stock?

Business

1 answer:

aleksley [76] · Answer 1 · 2022-01-13T05:05:30+03:00

aleksley [76]4 years ago

3 0

Answer:

The expected return on stock =

60.5+0.15-50.09=10.56

10.56/50.09=0.21= 21%

Yes We should buy this stock as its has an expected return of 21% and our required rate of return is 11.8%

Explanation:

Suppose you have some extra money to invest for 1 year. After a​ year, you will need to sell your investment to pay tuition. Aft

Suppose you have some extra money to invest for 1 year. After a year, you will need to sell your investment to pay tuition. Aft