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Daniel [21]
4 years ago
8

If Professor Siegel is correct that stocks are less risky than bonds, then the risk premium on stock may be zero. Assuming that

the risk-free interest rate is 2.5 percent, the growth rate of dividends is 1 percent and the current level of dividends is $70, use the dividend-discount model to compute the level of the S
Business
1 answer:
Ulleksa [173]4 years ago
5 0

If Professor Siegel is correct that stocks are less risky than bonds, then the risk premium on stock may be zero. Assuming that the risk-free interest rate is 2.5 percent, the growth rate of dividends is 1 percent and the current level of dividends is $70, use the dividend-discount model to compute the level of the S&P 500 that is warranted by the fundamentals.

Instruction: Round your response to 2 decimal places.

The level of the S&P 500 is

Answer:

Dividend discount model:

Price= D(1+g)/r-g

g=growth rate 1%

r= as given in question risk free rate 2.5%

D₀= $70

D₁=$70(1+0.01)  with growth rate

Solution:

70(1+0.01)/(0.025-0.01)

=$4713.33

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Answer: Option (B) is correct.

Explanation:

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If $1000 is invested at 6% interest, compounded annually, then after n years the investment is worth an
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Answer:

Results are below.

Explanation:

Giving the following information:

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6 0
3 years ago
Zeitler's Department Stores sells its products online and through traditional brick-and-mortar stores. The following parallel co
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Question Completion:

Choose the correct answer below

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(2) in-store customers appear to be generally younger, have lower annual income and live near a store

(3) Online customers appear to be generally younger, have higher annual income and live further distance away from a store

(4) Online customers appear to be middle aged, have lower annual income and live near a store

Answer:

Zeitler's Department Stores

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According to the parallel coordinates plot, online customers are differentiated from in-store customers in the following ways:

(3) Online customers appear to be generally younger, have higher annual income and live further distance away from a store

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Younger persons tend to embrace technology more than their older counterparts.  Based on this, they also engage on online purchasing of goods and services instead of visiting the traditional brick-and-mortar stores.  With online purchase, a customer is in better control because she can search for the best deals from any location.

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True or false: It is acceptable accounting practice to initially record prepaid rent in either a balance sheet or income stateme
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