Answered step by step
Verified Expert Solution
Question
1 Approved Answer
29. Suppose that in 2022 the expected dividends of the stocks in a broad market index equaled $300 million when the discount rate was
29. Suppose that in 2022 the expected dividends of the stocks in a broad market index equaled $300 million when the discount rate was 7% and the expected growth rate of the dividends equaled 5%. Using the constant-growth formula for valuation, if interest rates increase to 8%, the value of the market index will change by. (a) -15.00% (b) -33.33% (c) -40.00% (d) -25.00% 30. An investor pays $988.80 for a bond with $1000 par value. The bond has an annual coupon rate of 5.1%. What is the current yield on this bond? (a) 5.15% (b) 5.20% (c) 9.72% (d) 10.24% 31. When Google's share price reached $600 per share, Google had a P/E ratio of about 30 and an estimated market capitalization rate of 10%. Google pays no dividends. Approximately what percentage of Google's stock price. was represented by PVGO? (a) 75% (b) 33% (c) 50% (d) 67%
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started