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maw [93]
2 years ago
15

A common stock pays an annual dividend per share of $1.80. The risk-free rate is 5%, and the risk premium for this stock is 4%.

If the annual dividend is expected to remain at $1.80 per share, what is the value of the stock
Business
1 answer:
ArbitrLikvidat [17]2 years ago
3 0

Answer:

The value of the stock today is $20

Explanation:

Using the CAPM equation, we first calculate the required rate of retunr on the stock.

The equation for CAPM is,

r = rRF + Beta * rpM

Where,

  • rRF is the risk free rate
  • rpM is the risk premium on market
  • Beta * rpM is the risk premium on stock

r = 0.05 + 0.04

r = 0.09 or 9%

The value of the stock can be calculated using the zero growth model of DDM. The DDM values the stock based on the present value of the expected future dividends from the stock. As the dividend from the stock is expected to remain constant through out to an indefinite period, the value of the stock today is,

P0 = Dividend / r

P0 = 1.8 / 0.09

P0 = $20

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Answer:

get into critical country markets quickly, gain inside knowledge about unfamiliar markets and cultures, and access valuable skills and competencies that are concentrated in particular geographic locations.

Explanation:

Globalization can be defined as the strategic process which involves the integration of various markets across the world to form a large global marketplace. Basically, globalization makes it possible for various organizations to produce goods and services that is used by consumers across the world.

Some examples of international economic organizations involved in global economy and trade are;

I. World Trade Organization (WTO).

II. United Nations (UN).

III. International Monetary Fund (IMF).

IV. United Nations Conference on Trade and Development (UNCTAD).

When a company or business firm strive for global market leadership, its main focus would be to pursue strategic alliances or collaborative partnerships with foreign companies. This would enable it get into critical country markets quickly and effectively, it would also gain an inside knowledge and understanding about unfamiliar markets, consumer demographics and cultures, as well as getting hold of valuable skills and competencies that are concentrated in specific geographic locations in the world.

6 0
2 years ago
The management team at Imagine Advertising is trying to land a new client. Carla, the CEO, has set targets for how much the cont
Liono4ka [1.6K]

Answer:

B) leading

Explanation:

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5 0
2 years ago
O'Brien Ltd.'s outstanding bonds have a $1,000 par value, and they mature in 25 years. Their nominal annual, not semiannual yiel
kiruha [24]

Answer:

7.84%

Explanation:

Given:

Bond's par value (FV) = $1,000

Maturity (nper) = 25 × 2 = 50 periods (since it's semi-annual)

YTM (rate) = 0.0925÷2 = 0.04625 semi annually

Price of bond (PV) = $875

Calculate coupon payment (pmt) using spreadsheet function =pmt(rate,nper,-PV,FV)

PV is negative as it's a cash outflow.

So semi- annual coupon payment is $39.20

Annual coupon payment = 39.2×2 = $78.40

Nominal Coupon rate = Annual coupon payment ÷ Par value

                                     = 78.4 ÷ 1000

                                     = 0.0784 or 7.84%

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