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3 years ago

A stock has an HPR of 9%. The expected dividend yield is 3%.

Business

1 answer:

Arte-miy333 [17]3 years ago

3 0

Answer:

b. False

Explanation:

holding period return = [dividends received + (ending value - initial value)] / initial value

9% = [dividends received + (ending value - initial value)] / initial value

dividend yield = dividend / ending value

3% = dividend / ending value

price appreciation = (ending value / initial value) - 1

1.12 = ending value / initial value

ending value = 1.12 initial value ⇒ WE REPLACE IN THE HPR ANN DY FORMULAS

3% = dividend / 0.12 initial value

dividend = 0.36 initial value

9% = [dividends received + (1.12 initial - initial value)] / initial value

9% = dividends received + (0.12 initial value / initial value)

9% = dividends received + 12%

9% = 0.36 initial value + 12%

-3% = 0.36 initial value ⇒ THIS CANNOT BE TRUE, SO THE QUESTION MUST BE FALSE

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You are given the following total utilities of apples and mineral water obtained by

andrezito [222]

Answer:

2 apples and 6 bottles of water

Explanation:

since Bervin earns K22, her consumption possibilities frontier is:

apple water total utils obtained

4 units 1 unit 90 + 20 = 110 utils

3 units 3 units 75 + 54 = 129 utils

2 units 6 units 55 + 90 = 145 utils

1 unit 8 units 30 + 98* = 128 utils

0 units 11 units 0 + 98* = 98 utils

The optimal combination of apples and bottles of water is 2 apples and 6 bottles of water because that combination yields the most utils.

*Since the table only states the utils obtained until the 7th unit, we must assume that any additional unit consumed will provide 0 utils.

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4 years ago

The First Bank of Flagstaff has issued perpetual preferred stock with a $100 par value. The bank pays a quarterly dividend of $1

Olegator [25]

Answer:

$56.89

Explanation:

The computation of the current price of this preferred stock is shown below:

= Annual dividend ÷ required rate of return

where,

Annual dividend equal to

= Quarterly dividend × number of quarters in a year

= $1.65 × 4 quarters

= $6.6

And, the required rate of return is 11.6%

Now put these values to the above formula

So, the price would equal to

= $6.6 ÷ 11.6%

= $56.89

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4 years ago

Amanda's Interior Design has credit sales of $783,000, costs of goods sold of $418,000, and average accounts receivable of $107,

posledela

Answer:

The 50.30 days are required to take its credit customers to pay for their purchases.

Explanation:

For computing the average collection period, we have to use the formula of the average collection period.

Average collection period = Average accounts receivable ÷ Credit sales × total number of days in a year

= $107,900 ÷ $783,000 × 365

= 0.13780 × 365

= 50.30 days

We assume 365 days in a year

The cost of goods sold is irrelevant. Thus, it is not considered in the computation part.

Hence, 50.30 days are required to take its credit customers to pay for their purchases.

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3 years ago

Historical data show that during the recession of 1990–1991, the natural rate of unemployment was about 5.9% while the actual un

Lapatulllka [165]

Answer:

The actual unemployment rate was higher during the recession of 1990−1991, while cyclical unemployment was higher in 2001.

Explanation:

Given data in the question

In the year 1990-1991

The natural rate of unemployment = 5.9%

The rate of the actual unemployment = 7.0%

In the year 2001

The natural rate of unemployment = 4.8%

The actual unemployment rate = 6.0%

As we can see that

The actual unemployment is high in the year 1990-1991 i.e 7.0% as compare to the year 2001 i.e 6.0%

While the cyclical unemployment rate is high in 2001 i.e 1.2% (6.0 - 4.8%) as compare to the year 1990-1191 i.e 1.1% (7.0% - 5.9%)

6 0

3 years ago

. Shellbridge Corporation common stock has a par value of $25 and recently paid a dividend of $3.16 per share. The firm's divide

Fiesta28 [93]

Answer:

Intrinsic value: $ 45.19290274

The stock is undervalued as is selling for less.

Explanation:

We use the gordon model to solve for the intrinsic value of the share.

$\frac{divends_1}{return-growth} = Intrinsic \: Value$

we must solve for the grow rate like it was an interest rate:

$2.00 \times (1+g)^{10} = 3.16\\\sqrt[10]{\frac{3.16}{2.00}} -1 = g$

g = 0.046804808

<u>dividends one year from now:</u>

3.16 x (1 + 0.046804808) = 3.307903193

Now we calculate the instrinsic value:

$\frac{3.307903193}{0.10 - 0.046804808} = Intrinsic \: Value$

Value: $ 45.19290274

The stock is undervalued as is selling for less.

4 0

3 years ago