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
Crank
2 years ago
7

Each of two stocks, A and B, are expected to pay a dividend of $5 in the upcoming year. The expected growth rate of dividends is

10% for both stocks. You require a rate of return of 11% on stock A and a return of 20% on stock B. The intrinsic value of stock A
A. will be greater than the intrinsic value of stock B.
B. will be the same as the intrinsic value of stock B.
C. will be less than the intrinsic value of stock B.
D. cannot be calculated without knowing the market rate of return.
Business
1 answer:
salantis [7]2 years ago
3 0

Answer:

a

Explanation:

Intrinsic  value can be determined using the constant dividend growth model

according to the constant dividend growth model

price = d1 / (r - g)

d1 = next dividend to be paid

r = cost of equity

g = growth rate

Stock A = $5/ (0.11 - 0.1) = $500

Stock B = $5/ (0.2 - 0.1) = 50

Intrinsic value of A is greater than that of B

You might be interested in
A perfectly competitive market helps ensure that the products produced are the goods that consumers want. this demonstrates the
frozen [14]
A perfectly competitive market helps ensure that the products produced are the goods that consumers want demonstrates the concept of allocative efficiency.
<span>Allocative efficiency defines a state of the economy in which production represents consumer preferences and it is a characteristic of  an efficient market.
</span>
5 0
3 years ago
Jake is in the stands at a football game with his girlfriend. He decides that he needs to ask her something very personal, so he
kenny6666 [7]
Jake has changed the SOCIAL PSYCHOLOGICAL CONTEXT.
Context refers to the environment in which communication take place. There are four types of context, which are: cultural, temporal, physical and social psychological context.
Social psychological context refers to the formality or informality of the situation depending on the relationship between the two people that are communicating.<span />
4 0
2 years ago
Read 2 more answers
What 3 documents are necessary during home buyer prequalification
joja [24]
I know you need income statements, tax returns, and a credit check.  I just went through this.  First, they run your credit with a "soft pull".  Then they request income verification to figure out your debt to income ratio and what you can afford/qualify for.  Then they want to see your tax returns to prove that income, and how long you've had it.  
3 0
3 years ago
Which of the following is NOT an example of how a bank can make money?
KiRa [710]

Answer:

I think it's #4 participating in a bank run, because loaning money u give money away but they still have to give that money back by paying the loan little by little.

Explanation:

3 0
3 years ago
The double-entry principle in the balance-of-payments
Sliva [168]

Answer:

The Current account is for goods and services.

The Financial account is for exchange of currencies and financial assets across countries.

Miguel, a U.S. resident, buys an HDTV set for  $2,500 and sends it to Mexico as a gift to his parents. <u>DEBIT CURRENT ACCOUNT. CREDIT CURRENT ACCOUNT. </u>

Miguel buys the good in the U.S. and then sends it so this falls under the current account alone.

Arielle, a French tourist, stays at a hotel in San  Francisco and pays $400 for it with her debit  card issued by a French bank. <u>DEBIT FINANCIAL ACCOUNT. CREDIT CURRENT ACCOUNT. </u>

The Financial account should be debited to show that currency is coming into the U.S. from outside the country and current account should be credited for services rendered.

A U.S. computer manufacturer purchases hard  drives from a Korean company, paying the funds  from its bank account in Korea. <u>DEBIT CURRENT ACCOUNT. CREDIT FINANCIAL ACCOUNT. </u>

Current account should be debited to reflect that goods are coming into the country but the financial account should be credited to show that currency is leaving the ownership of an American entity so it is passing out of American hands.

3 0
3 years ago
Other questions:
  • Which of the following is NOT one of Porter's five primary forces?
    8·1 answer
  • A company had net income of $234,665. Depreciation expense is $21,819. During the year, Accounts Receivable and Inventory increa
    11·1 answer
  • What is animation?
    9·1 answer
  • A put on Sanders stock with a strike price of $31 is priced at $2 per share, while a call with a strike price of $31 is priced a
    9·1 answer
  • The newspaper reported last week that Bennington Enterprises earned $34.07 million this year. The report also stated that the fi
    5·1 answer
  • Herc Co.'s inventory on December 31, 2005 was $1,500,000, based on a physical count priced at cost, and before any necessary adj
    14·1 answer
  • SuperOil has a debt-to-value ratio of 15%. Its revenue is 100,000 per year and cost is 70,000 per year forever. Its cost of debt
    7·1 answer
  • Professional social media sites can also help employers find you. When you create an account, you describe your work history in
    8·2 answers
  • Financial statements of Kansas Ltd (Fr) for 2X13 are authorized by management and auditors on February 15, 2X13 for issuance on
    14·1 answer
  • ________ would be hurt by unexpected inflation. a. A firm that purchased inputs with a two-year contract b. A worker whose wage
    10·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!