D. suitability for the product and ability to make the purchase
<span>Gold is the main commodity on the JEB. Right now gold is trading around the $1250 level.</span>
Answer:
Theory of Efficient markets
Explanation:
According to this theory stock prices react instantaneously to new information
A = $9.99, the amount needed after 1 year
r = 0.018% = 0.00018, interest rate
n = 12, compoundings per year
t = 1, one year duration
Let P = required balance at the beginning of the year.
Then
P(1 + 0.00018/12)¹² = 9.99
1.00018P = 9.99
P = $9.988 ≈ $9.99
Answer: $9.99
Answer: $8.81
Explanation:
To solve this, add the present values of the dividends from years 3, 4 and 5 and then add the present value of the terminal value of the stock at year 5.
Year 3 dividend = $0.50
Year 4 dividend = 0.50 * (1 + 49%) = $0.745
Year 5 dividend = 0.745 * 1.49 = $1.11005
= Dividend in year 3 / (1 + required rate of return)³ + Dividend in year 4 / (1 + required rate of return)⁴ + Dividend in year 5 / (1 + required rate of return)⁵ + (Dividend in year 5 * (1 + growth rate) / ( required rate of return - growth rate ) ) / (1 + required rate of return)⁵
= 0.5 / 1.16³ + 0.745/1.16⁴ + 1.11005/1.16⁵ + ( 1.11005 / (16% - 9%)) / 1.16⁵
= $8.81
