Answer:
The answer is Letter B, appraisal index
Explanation:
Because appraisal index returns are based on estimates of property values. Estimating values tends to introduce smoothing into returns data, appraisal index returns are likely to have lower standard deviations than index returns based on repeat sales, trading prices or REIT trading price.
Answer:
$44.25
Explanation:
<u>procedure 1:</u>
we can determine the present value of the stock using the following formula:
present value = future value / (1 + constant growth rate)ⁿ
- future value = $50
- constant growth rate = 13%
- n = 1
present value = $50 / (1 + 13%) = $50 / 1.13 = $44.25
<u>procedure 2 (optional):</u>
future value = future dividend / (required rate of return - constant growth rate)
$50 = future dividend / (18% - 13%)
future dividend = $50 x 5% = $2.50
now we must determine the dividend for the current year:
current dividend = future dividend / (1 + constant growth rate)
current dividend = $2.50 / (1 + 13%) = $2.50 / 1.13 = $2.21
now we apply the Gordon growth model:
present value = dividend / (required rate of return - constant growth rate)
present value = $2.21 / (18% - 13%) = $2.21 / 5% = $44.25
