Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

1. High Flyer industries just paid its annual dividend of $4 per share. The dividend is expected to grow at 11% indefinitely. The beta is

1. High Flyer industries just paid its annual dividend of $4 per share. The dividend is expected to grow at 11% indefinitely. The beta is 1.5, Rfr is 5%. Market risk premium is 7.5%. What is the intrinsic value of the stock?

2. If beta was 1.25, and all else was the same, what would the intrinsic value be?

3. IBX stock dividend is expected to be $3.50 at the end of the year, and is expected to grow at 7.5% annually, forever. If the ROR of IBX stock is 15.25% per year, what is its intrinsic value?

4. If IBX stock market price is equal to its intrinsic value, what is next years expected price?

5. If an investor were to buy IBX stock now and sell it after receiving the $2.15 dividend a year from now, what is the expected capital gain in percentage terms?

6. What is the dividend yield?

7. What is the holding period return?

8. If ROE is 28% and b is 80%, then what is g?

9. If a dividend for a stock is expected to be $4 and the discount rate is 17%, while the dividend is expected to grow at 5% indefinitely, what is the expected spot price, right now?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Handbook Of Asset And Liability Management Volume 2

Authors: S. A. Zenios, W. T. Ziemba

1st Edition

0444528024, 978-0444528025

More Books

Students also viewed these Finance questions

Question

What is linear transformation? Define with example

Answered: 1 week ago