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
Verizon [17]
3 years ago
8

A share of stock is now selling for $75. It will pay a dividend of $6 per share at the end of the year. Its beta is 1. What do i

nvestors expect the stock to sell for at the end of the year? Assume the risk-free rate is 5% and the expected rate of return on the market is 13%. (Round your answer to 2 decimal places.)
Business
2 answers:
shepuryov [24]3 years ago
8 0

Answer:

Sell Price= $1044

Explanation:

Equity Risk Premium = Market Return - Risk Free Rate

= 13 - 5

= 8%

Risk Free Rate = 5%

Beta = 1  

Expected Return on stock = Risk-free rate + Equity risk premium * Beta for stock

= 5 + 1*8 = 13%

Current Price = Present Value of Future Payments

75 = 6*(1+i)^-1 + Sell Price*(1+i)^-1 , where i=13%

Sell Price = 74.572/0.0714

Sell Price= $1,044

nydimaria [60]3 years ago
7 0

Answer:

$80.31

Explanation:

since the stock's beta = 1, its required rate of return = market rate of return, since the stock's risk is identical to the market's risk.

price of the stock in 1 year = current price + present value of future dividend

  • present value of the dividend = $6 / (1 + RRR) = $6 / (1 + 13%) = $5.31
  • current price = $75

price of the stock in one year = $75 + $5.31 = $80.31

You might be interested in
44) Christopher, a department manager, is attending the monthly budget planning meeting where all the department managers report
andreev551 [17]

When Christopher ask questions and nods his head after their responses. He is exhibiting the active style of listening.

<h3>What is active listening?</h3>

Active listening is a type of listening where the listener give rapt attention to the person <em>speaking</em> including the guestures.

The individual also ask questions to confirm all that his learning.

Therefore, When Christopher ask questions and nods his head after their responses. He is exhibiting the active style of listening

Learn more on active listening here,

brainly.com/question/3185541

5 0
2 years ago
It’s important to consider whether you should address an acquaintance formally or informally.
VARVARA [1.3K]

Answer:

True

Explanation:

Im sorry please forgive me I messed up big time

4 0
3 years ago
Suppose that the organic-produce industry is composed of a large number of small firms. In recent
masha68 [24]

Answer:

The correct answer is option d.

Explanation:

An industry is comprised of a large number of small firms.  

Because of losses, many firms have left the industry.  

This will cause the industry supply to decline.  

The industry supply curve will move to the left.  

The new supply curve will intersect the demand curve at a higher point.

This leftward shift in the supply curve will cause the equilibrium price to increase and equilibrium quantity to decline.

3 0
3 years ago
g suppose that a commercial bank wants to buy treasury bills. these instruments pay $500 in one year and are currently selling f
Vinil7 [7]

Answer:

9.98%

Explanation:

Yield to maturity is the annual rate of return that an investor receives if a bond bond is held until the maturity. It is a long term return which is expressed in annual term.

As per given data

Annual Payment = $500

Current price = $5,012

$500 payment each year for indefinite period of time is a perpetuity, value of perpetuity can be calculated as follow

Current Price = Annual Payment / Yield to maturity

Yield to maturity = Annual Payment / Current Price

Yield to maturity = ( Annual payment / Current price ) x 100

Yield to maturity = ( $500 / $5,012 ) x 100

Yield to maturity = 0.0998 x 100

Yield to maturity = 9.98%

3 0
3 years ago
Use the hypothetical data in the table to answer the questions.
nalin [4]

Solution:

1. The average snowfall in cincinnati over this period was 28 inches.

In the city cincinnati, snowfall (inches) in january and february is 18 and 38 respectively :

                   Average snowfall = {18+38}/{2} = 28 inches    

2. If the march data on snowfall is above the average (i.e 28 inches), The monthly average will rise.

If the march data on snowfall is above the average snowfall in January and February (i.e 28 inches), the monthly average will rise because, any snowfall data in march which is greater than 28 inches will lead to rise in monthly average.

For e.g  , suppose, If we consider snowfall (inches) in march is 30 inches, than monthly average is :

Monthly average snowfall= {18+38+31} / {3}= 29 inches

which is greater than 28 inches.

Therefore, If the march data on snowfall is above the average (i.e 28 inches), The monthly average will rise.

8 0
3 years ago
Other questions:
  • Digitec Company has recently decided to design and manufacture a laptop that retails for under $50, in an effort to make IT avai
    8·1 answer
  • Matt purchases 4 boxes of spinach and 3 pounds of tomatoes per month when the price of spinach is $1.50 per box. He purchases 5
    14·2 answers
  • Kelly wants to save money for an emergency fund. She decides to take advantage of the high interest rates of the holiday club he
    13·1 answer
  • Which of the following statements is correct? A. The Federal funds rate is the rate banks charge their most creditworthy custome
    12·1 answer
  • The supplies account had a beginning balance of $1,823. Supplies purchased during the period totaled $4,344. At the end of the p
    12·1 answer
  • Certain skilled labor, such as hair cutting, requires licensing or certification. This is costly and takes a long time to acquir
    6·1 answer
  • I need Short Term, Med Term, and Long Term goals for a sports cleat business
    5·1 answer
  • Today, you borrowed $12,200 on your credit card to purchase some furniture. The interest rate is 16.8 percent, compounded monthl
    13·1 answer
  • here is more poi nts sorry for my last one that got flagged cause ech o2155 flagged my question I'm just doing a give away
    8·1 answer
  • Design quality is considered a(n) __________ for the firm. Multiple choice question. insignificant cost strategic decision servi
    13·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!