1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
taurus [48]
4 years ago
15

A share of stock sells for $35 today. The beta of the stock is 1.2 and the expected return on the market is 12 percent. The stoc

k is expected to pay a dividend of $0.80 in one year. If the risk-free rate is 5.5 percent, what should the share price be in one year?
Business
1 answer:
seraphim [82]4 years ago
7 0

Answer:

$38.78          

Explanation:

The formula to compute the share price in one year is shown below:

Price of a stock = (Next year dividend) ÷  (Required rate of stock return - growth rate)

where,

Price of the stock = Next year dividend ÷ (Risk free rate + beta × (Market return - Risk free rate) - Dividend growth rate)

$35 = $0.80 ÷ (5.5% + 1.2 × (12% - 5.5%) - g)

So after solving this

The growth rate is 11.01%

Now the share price after one year is

= 0.80 × (1 + 11.01%) ÷ (13.3% - 11.01%)

= $88.81 ÷ 2.29%

= $38.78

You might be interested in
As diversity grows in both society and the workplace, interacting and communicating with your coworkers will present specific ch
Fed [463]

Answer:

A)Understand the value of difference.

B)Seek training.

G)Build on similarities.

Explanation:

A)When one find his/ her self in a diverse work environment, one should understand that people are created differently with different behavior, understanding this differences will enable individual to work together to achieve high productivity.

B) by seeking training, ways to relate with coworkers can be learnt therefore enabling unity in the organization and team work would be easier.

C) Building similarities will lead to a acceptance of differences that exist between co-workers then this will enable good relationship s.

6 0
3 years ago
The term _____ refers to the values and norms that are shared among employees of an organization. environmental factors performa
PtichkaEL [24]
The term organization culture refers to the values and norms that are shared among employees of an organization. Your culture is the values, norms and beliefs you were raised in and believe in. This is also true for a business, they have values and norms that everyone follows when representing the company they work for. 
8 0
3 years ago
José, an employee of a company that has worked hard to have a customer mind-set, understands that _____.
Setler79 [48]

José, an employee of a company that has worked hard to have a customer mind-set, understands that to have a customer mind-set, it's easiest to put yourself in their shoes.

When you think and understand the way a customer does, it is easier to sell to someone in that mind-set. The main ground in sales is making sure your customers can relate to you, if you are relatable you are more trustworthy in their eyes and will have a better chance of closing on the sale.

4 0
3 years ago
When labor supply decreases, the wage is expected to:
lozanna [386]
I think its answer is c.decrease.
6 0
3 years ago
Acme, Inc., which manufactures the fireworks that municipal governments buy to put on their annual fireworks shows on the Fourth
kap26 [50]

Answer:

Reshoring.

Explanation:

Reshoring is the process of returning the production and manufacturing of goods back to the company's original country. Reshoring is also known as onshoring, inshoring or backshoring.

7 0
3 years ago
Other questions:
  • Florida Groves has a $250,000 bond issue outstanding that is selling at 102 percent of face value. The firm also has 2,000 share
    8·1 answer
  • Complete the paragraph to explain why unearned revenues are liabilities instead of revenues. In the​ explanation, use the follow
    9·1 answer
  • When one nation can produce a product at lower cost relative to another nation, it is said to have a(n) __________________ in pr
    10·1 answer
  • The message "drink milk every day" is an example of which type of advertising
    15·1 answer
  • Max Weber argued that the ascetic principles embedded in ________ do not encourage entrepreneurial activity in pursuit of wealth
    10·1 answer
  • When an advertiser cites technical information, such as the results of laboratory studies, in an advertisement, a(n) _____ style
    7·1 answer
  • The following transactions apply to Ozark Sales for Year
    5·1 answer
  • Gillian reprimands an employee in front of his peers for speaking out of turn during a sales meeting. Which of the following typ
    8·1 answer
  • a. In 2018, manufacturing workers in the United States earned average compensation of $21.86 per hour. That same year, manufactu
    12·1 answer
  • Why Corporations Hedge?
    14·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!