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Ivanshal [37]
3 years ago
14

Your broker suggests that the stock of DUH is a good purchase at $25. You do an analysis of the firm, determining that the recen

t $1.40 dividend and earnings should continue to grow indefinitely at 5 percent annually. The firm's beta coefficient is 1.3, and the yield on Treasury bills is 1.4 percent. If you expect the market to earn a return of 8 percent, what is your valuation of DUH
Business
1 answer:
jarptica [38.1K]3 years ago
5 0

Answer:

The correct answer is "$28.03".

Explanation:

The given values are:

Good purchase,

= $25

Dividend,

= $1.40

Annually earning,

= 5%

Beta coefficient,

= 1.3

Treasury bills,

= 1.4%

Now,

= 1.4+1.34\times 8-1.4

= 1.34\times 8

= 10.244 (%)

hence,

The fair value will be:

= 1.4\times \frac{1.05}{.10244}-.05

= 28.03

Absolutely, the proposal including its brokerage must be adopted because as fair market value was almost $25.

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The terms here refer to tools of monetary policy. Match each with its corresponding description. Two of the descriptions here do
OverLord2011 [107]

Answer:

The reserve ratio - The Federal Reserve Bank increases the share of total deposits that banks can legally loan.

The reserve ratio is the percentage of deposits that banks have to keep as reserve and cannot loan. If the fed lowers the reserve ration, it means that banks can loan a higher share of the total deposits that they store.

Open-market operation - The European Central Bank purchases bonds from commercial banks.

In Open-market operations, central banks purchase bonds and other securities in the open market in order to lower the interest rate, or they sell securities in order to raise the interest rate.

The term auction facility - The Federal Reserve requests secret bids from banks for the right to borrow money.

The term auction facility is a program in which the Federal Reserve bids loans under special conditions to bidding banks.

The discount rate - The central bank decreases the rate that it charges to commercial banks for loans.

The discount rate is the rate at which central banks loan money to commercial banks.

8 0
3 years ago
Cadillac's portfolio consists of sedans, a crossover, a sport utility vehicle, and a high-performance version of the sedan. the
SashulF [63]

This difference in availability is an example of how the products within the Cadillac portfolio are differentiated by the <u>"place"</u> element of the marketing mix.

We can define marketing mix as to put the correct item or a combination thereof in the spot, at the ideal time, and at the correct cost. The troublesome part is doing this well, as you have to know each part of your business strategy.  

Place in the p's of marketing mix is an essential part. You have to position and distribute the item in a place that is available to potential purchasers.

8 0
4 years ago
May decides to start a new clothing company. she is targeting those customers who want to be fashionable and trendy, yet differe
Akimi4 [234]

Answer:

Mass Customization

Explanation:

Mass customization can be said to be May attending to/serving customers specially.

May is offering a catalogue of products that can be styled as in each person wants his/hers to be. This strategy requires customers to come up with their own design of the basic clothes she has put in the catalogue.

Cheers

7 0
3 years ago
Walter builds birdhouses. He spends $5 on the materials for each birdhouse. He can build one in 30 minutes. He is semi-retired b
Leokris [45]

Answer: $4

Explanation: Implicit cost or sometimes referred to as the opportunity coast is the part of economic cost of a project. It can be defined as the loss of profit someone faces when choosing one alternative over other.

So implicit cost of Walter is $4 ($8 * 1/2HOUR), that is, the amount he could have earned if he were not building a birdhouse.

6 0
3 years ago
Assuming a​ 1-year, money market account investment at 4.83 percent​ (APY), a 3.55​% inflation​ rate, a 25 percent marginal tax​
Anton [14]

Answer:

Explanation:

Rate of return = 4.83%

inflation rate =3.55 %

marginal tax bracket = 25 %

after tax rate of return = 4.83 ( 1 - .25 ) = 3.6225 %

after tax inflation rate = 3.55 (m 1 - .25 ) = 2.6625 %

real rate of return =  [ (1+3.6225% /1+ 2.6625%)  - 1 ] x 100

= .0093 x 100 = .93 %

Total monetary return =  30000 x 3.625 %

= 1087.5

Rate of return is more than rate of inflation , for short term perspective staying invested in money market investment is good option . Real rate of return is not negative at least .

4 0
4 years ago
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