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Natali5045456 [20]
3 years ago
7

Company X has 100 shares outstanding. It earns $1,000 per year and expects to pay all of it as dividends. If the firm expects to

maintain this dividend forever, calculate the stock price today. (The required rate of return is 10%.)
Business
1 answer:
nlexa [21]3 years ago
4 0

Answer:

The price of the stock is $100.

Explanation:

First we need to find the dividend per share.

We find that out by dividing the total dividend payment by the number of shares outstanding.

1000/100= 10

We now know that the dividend per share is $10. Because the firm expects to mantain this dividend forever and there are no chances of dividend growth we can use the formula for a perpetuity to find the price of the stock.

Price of stock = Dividend/Required rate of return

Price = 10/0.1=$100

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Just jump right into it
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3 years ago
Your portfolio has a beta of 1.28. The portfolio consists of 25 percent U.S. Treasury bills, 31 percent Stock A, and 44 percent
Ivanshal [37]

Answer:

2.21

Explanation:

Portfolio beta = Respective beta*Respective weight

<em>Beta of market=1;Beta of risk-free assets=0</em>

1.28 = (0.25*0) + (0.31*1) + (0.44*Beta of Stock B)

1.28 = 0 + 0.31 + 0.44*Beta of Stock B

1.28 - 0.31 = 0.44*Beta of Stock B

Beta of Stock B = 0.97/0.44

Beta of Stock B = 2.204545454545455

Beta of Stock B = 2.21

7 0
3 years ago
2. "A company's net income appears directly on the income statement and the owner's equity statement, and it is included indirec
tamaranim1 [39]

Answer:

Yes, I do agree with the statement

Explanation:

The statement which is stating that the company net income  as well as the statement of the owner's equity both are included or shown indirectly in the company balance sheet . As balance sheet is that statement which tells the financial position or performance of the company at a specific time period.

Because the net income is the outcome of income statement and directly shown or stated in the income statement whereas owner's equity is the capital of the business which is shown in the balance sheet. Net income is already included in retained earnings which means shown indirectly in the balance sheet.

8 0
3 years ago
With respect to market segmentation, the 80-20 principle has been applied to segmenting markets based on
never [62]

Answer:

This principle is based on the idea of Vilfredo Pareto, an Italian economist that stated 80% of the results are concentrated in 20% of the activities executed. In Business, this idea is extrapolated as 80% of results come from 20% of the clients.

Explanation:

8 0
3 years ago
___________are funds that the bank keeps on hand that are not loaned out or invested in bonds. group of answer choices
Nadusha1986 [10]

Certificates of deposit exist as funds that the bank keeps on hand that exists not loaned out or invested in bonds.

<h3>What are certificates of deposits?</h3>

Unsecured negotiable promissory notes, or certificates of deposit (CDs), are frequently issued by commercial banks and other financial organizations.

A certificate of deposit (CD) is a type of savings account where the issuing bank pays interest in exchange for holding a specified sum of money for a predetermined length of time, such as six months, a year, or five years. You will receive the amount you initially invested plus any interest when you cash in or redeem your CD.

Bonds and certificates of deposit (CDs) are comparable but not the same. Both of these securities are fixed-income investments that the holder keeps until the due dates. Investors invest money in bonds or CDs for a predetermined amount of time, and when that time expires, they receive their money back.

To learn more about certificate of deposit refer to:

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