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romanna [79]
3 years ago
5

Top hedge fund manager Sally Buffit believes that a stock with the same market risk as the S&P 500 will sell at year-end at

a price of $44. The stock will pay a dividend at year-end of $2.00. Assume that risk-free Treasury securities currently offer an interest rate of 1.9%.Average rates of return on Treasury bills, government bonds, and common stocks, 1900–2017 (figures in percent per year) are as follows. Average Premium Average Annual (Extra returnPortfolio Rate of Return (%) versus Treasury bills) (%)Treasury bills 3.8 Treasury bonds 5.3 1.5 Common stocks 11.4 7.6 A. What is the discount rate on the stock? B. What price should she be willing to pay for the stock today?
Business
1 answer:
Rus_ich [418]3 years ago
6 0

Answer:

a. 9,50%

b. $47.09

Explanation:

a) Discount rate on the stock

Average Risk Premium of Stock = 7.60%

Current risk-free rate = 1.60%

Discount Rate = 7.60% + 1.90%

Discount Rate = 9.50%

b) Current Price = ($41 + $2) / (1 + 9.50%)^1

Current Price = $43 / (1.0950)^1

Current Price = $43 / (1.0950)^1

Current Price = $43 / 0.91324

Current Price = $47.0851035872278

Current Price = $47.09

Note: Stock price equals the present value of cash flows for a 1-year horizon (Fv + Dividend)/(1+ Discount rate)^n

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IgorLugansk [536]

Answer:

<em>d. gaining exposure</em>

Explanation:

<em>The stated event that Kimberly indulge is an example of</em> gaining exposure.

Gaining exposure is basically known as a gain of experience. Exposure has its meaning that is known as experience.

<em>Kimberly wants to gain experience</em> which is also known as gaining of exposure. <em>That is the reason that wants to learn about the up-to-dated development in agricultural equipment and as well as tools.</em>

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3 years ago
One way of shooting a bow is the bowsight aiming method. this method:
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3 years ago
Common Law is?
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Answer:

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Explanation:

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3 years ago
Which three factors decrease because of protectionism? competition job security domestic production goodwill with trade partners
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3 0
2 years ago
The Fan Cost Index​ (FCI) represents the cost of four​ average-price​ tickets, refreshments, and souvenirs to a sporting event.
Mashcka [7]

Answer:

The hockey FCI is $53.57 and the golf FCI is 45.12$.

Explanation:

The hockey FCI (HFCI) is $8.45 more expensive than the golf FIC (GFCI). You know that both FICs are in total: $98.69.  

1- Subtract $8.45 from the total of $98.69: $90.24.

2- Split the remaining amount in half: $90.24/2: $45.12.  

3- The HFCI is $45.12 + $8.45: $53.57.

   The GFCI is $45.12.  

If you add both FCIs you should get the total $98.69:

$53.57 + $45.12: $98.69$

The hockey FCI is $53.57 and the golf FCI is 45.12$.

I hope this answer helps you!

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3 years ago
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