a (1) Find the monthly return of Amazon and Nasdaq. (2) Run a liner regression to estimate beta of Amazon. (3) Use Corrl (Amazon return, Nasdaq return) X STDEV(Standard deviation of Amazon return) STDEV (standard deviation of Nasdaq return) to find beta of Amazon. (4) Use the security market line or capital asset pricing model to find the required rate of return of Amazon, assuming market return is 12% and risk free rate is 3%. 2. Assume a stock that has a payout ratio of 30%, a current dividend of $2, a return on investment of 12%, and a beta of 145. Its dividends are assumed to grow at a constant rate. Assume market return of 12% and risk free rate of 3% (1) Find the growth rate. (2) Estimate the expected future dividends for the next 50 years. (3) Find the require rate of return. (4) Find the present value of expected future dividends and the sum of all (5) Use the constant growth rate model VO-01/(Kg) to find the value of the stock, (6) Compare your answer to (4) and (5). 3. Assume a stock that will pay dividends of $1.55 each year for the next five years and will have an expected price of $25 in five years. It has a beta of 0.86. Market return is 12% and risk free rate is 3%. (1) Find its required rate of retum (2) Find its value (3) If stock price is $18, what is the expected retum? Is the price low or high? Is the expected return low or high? is this stock a good investment? Explain (4) If stock price is $22, what is the expected return? Is the price low or high? Is the expected return low or high? Is this stock a good investment? Explain Date amazon price and doing price 5/1/2016 722789978 49.90S 6/1/2016 715.519995 1842.669922 7/1/2016 758.809998 5162.129083 8/1/2015 769.159973 5213.220715 9/1/2016 837 309998 5312 10/1/2016 79.820007 $189.140137 11/1/2016 750 570007 5322680175 12/1/2016 749.869995 513120117 1/1/2017 223.47998 5614790039 2/1/2017 845.099978 5825.439941 3/1/2017 886 539978 5911740234 4/1/2017 92498999 6047609963 5/1/2017 994.619995 619 52002 6/1/2017 968 6140419922 7/1/2017 987,780029 634 120117 8/1/2017 980599976 542.660156 9/1/2017 961.349976 6495959961 10/1/2017 1105.280029 6727669922 11/1/2017 1176.75 6873.970215 12/1/2017 1169.469971 6903.390137 1/1/2018 1450 190015 7411.47998 2/1/2018 1512.449951 7273.009766 3/1/2018 1447.379966 7053.450195 4/1/2018 1566.130005 7056 27002 5/1/2018 1629.619995 7442 120117 6/1/2018 1699.800049 7510 299805 7/1/2018 1777.439941 7671.790039 8/1/2018 2012.709961 3109 540039 9/1/2018 2003 B046.350098 10/1/2018 1598.01001 7305.899902 11/1/2018 1690 170044 7330 540039 12/1/2018 1501.969971 6635.279785 1/1/2019 1718.72995 7281740234 2/1/2019 1639.829956 7532.529785 3/1/2019 1780.75 7729.319824 4/1/2019 1926.5.2002 3095 390137 5/1/2019 1775.069946 7453149902 6/1/2019 1893.630005 1006240234 7/1/2019 1866.780029 8175.419922 8/1/2019 1776.290039 7962.879883 9/1/2019 1735.910034 27999339844 10/1/2019 1776 660034 3292360352 11/1/2019 1800.800049 8665.469727 12/1/2019 1847.839966 1972.599609 1/1/2020 2008.719971 9150 94043 2/1/2020 1883.75 8567370117 3/1/2020 1949.719971 7700100098 4/1/2020 8889 549805 5/1/2020 2442370117 9489.870117 6/1/2020 2758.820068 10058.76953 7/1/2020 3164679932 20745.26953 B/1/2020 3450 959961 1127545996 9/1/2020 3148.72998 11167.50977 10/1/2020 3036.169902 10931.58984 11/1/2020 3168.040039 12138 14023 12/1/2020 3256.929932 2283329027 1/1/20213206. 199951 2:30:20.6.2013 2/1/2021 3092929932 1312234961 3/1/2021 3094 080078 1324667012 4/1/2021 3279.389893 13658.37988 2474 a (1) Find the monthly return of Amazon and Nasdaq. (2) Run a liner regression to estimate beta of Amazon. (3) Use Corrl (Amazon return, Nasdaq return) X STDEV(Standard deviation of Amazon return) STDEV (standard deviation of Nasdaq return) to find beta of Amazon. (4) Use the security market line or capital asset pricing model to find the required rate of return of Amazon, assuming market return is 12% and risk free rate is 3%. 2. Assume a stock that has a payout ratio of 30%, a current dividend of $2, a return on investment of 12%, and a beta of 145. Its dividends are assumed to grow at a constant rate. Assume market return of 12% and risk free rate of 3% (1) Find the growth rate. (2) Estimate the expected future dividends for the next 50 years. (3) Find the require rate of return. (4) Find the present value of expected future dividends and the sum of all (5) Use the constant growth rate model VO-01/(Kg) to find the value of the stock, (6) Compare your answer to (4) and (5). 3. Assume a stock that will pay dividends of $1.55 each year for the next five years and will have an expected price of $25 in five years. It has a beta of 0.86. Market return is 12% and risk free rate is 3%. (1) Find its required rate of retum (2) Find its value (3) If stock price is $18, what is the expected retum? Is the price low or high? Is the expected return low or high? is this stock a good investment? Explain (4) If stock price is $22, what is the expected return? Is the price low or high? Is the expected return low or high? Is this stock a good investment? Explain Date amazon price and doing price 5/1/2016 722789978 49.90S 6/1/2016 715.519995 1842.669922 7/1/2016 758.809998 5162.129083 8/1/2015 769.159973 5213.220715 9/1/2016 837 309998 5312 10/1/2016 79.820007 $189.140137 11/1/2016 750 570007 5322680175 12/1/2016 749.869995 513120117 1/1/2017 223.47998 5614790039 2/1/2017 845.099978 5825.439941 3/1/2017 886 539978 5911740234 4/1/2017 92498999 6047609963 5/1/2017 994.619995 619 52002 6/1/2017 968 6140419922 7/1/2017 987,780029 634 120117 8/1/2017 980599976 542.660156 9/1/2017 961.349976 6495959961 10/1/2017 1105.280029 6727669922 11/1/2017 1176.75 6873.970215 12/1/2017 1169.469971 6903.390137 1/1/2018 1450 190015 7411.47998 2/1/2018 1512.449951 7273.009766 3/1/2018 1447.379966 7053.450195 4/1/2018 1566.130005 7056 27002 5/1/2018 1629.619995 7442 120117 6/1/2018 1699.800049 7510 299805 7/1/2018 1777.439941 7671.790039 8/1/2018 2012.709961 3109 540039 9/1/2018 2003 B046.350098 10/1/2018 1598.01001 7305.899902 11/1/2018 1690 170044 7330 540039 12/1/2018 1501.969971 6635.279785 1/1/2019 1718.72995 7281740234 2/1/2019 1639.829956 7532.529785 3/1/2019 1780.75 7729.319824 4/1/2019 1926.5.2002 3095 390137 5/1/2019 1775.069946 7453149902 6/1/2019 1893.630005 1006240234 7/1/2019 1866.780029 8175.419922 8/1/2019 1776.290039 7962.879883 9/1/2019 1735.910034 27999339844 10/1/2019 1776 660034 3292360352 11/1/2019 1800.800049 8665.469727 12/1/2019 1847.839966 1972.599609 1/1/2020 2008.719971 9150 94043 2/1/2020 1883.75 8567370117 3/1/2020 1949.719971 7700100098 4/1/2020 8889 549805 5/1/2020 2442370117 9489.870117 6/1/2020 2758.820068 10058.76953 7/1/2020 3164679932 20745.26953 B/1/2020 3450 959961 1127545996 9/1/2020 3148.72998 11167.50977 10/1/2020 3036.169902 10931.58984 11/1/2020 3168.040039 12138 14023 12/1/2020 3256.929932 2283329027 1/1/20213206. 199951 2:30:20.6.2013 2/1/2021 3092929932 1312234961 3/1/2021 3094 080078 1324667012 4/1/2021 3279.389893 13658.37988 2474
