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1. Use the stock prices for Amazon and the index levels for the S&P 500 to estimate beta for Amazon (AMZN). 2. If the
1. Use the stock prices for Amazon and the index levels for the S&P 500 to estimate beta for Amazon (AMZN). 2. If the risk-free rate is 4.39% and the market risk premium is 6.75%, what is Amazon's cost of equity using the beta estimate from (1) and the CAPM. 3. Assume that Amazon just paid a dividend of $0.75/share, they expect the dividend to rise at a constant rate of 10%, and the current price of the stock is $88.25. Is Amazon considered over or under-valued using the information from (2). 4. Assume you have a bond with a par value of $1,000, a coupon of 4.3% paid semi-annually with seven years to maturity, and a current price of $1,025.76, what is the YTM? 5. Now assume the same characteristics from (4), where appropriate, but now the YTM moves to 4.88%, what is the new price of the bond?
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1 To estimate the beta for Amazon AMZN you would need historical stock prices for Amazon and the corresponding levels of the SP 500 index Unfortunatel...Get Instant Access to Expert-Tailored Solutions
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