Question
Please help answer questions below.... Calculate the required rate of return using the Capital Asset Pricing Model (CAPM). (Completed see chart 1) Using the constant
Please help answer questions below....
Calculate the required rate of return using the Capital Asset Pricing Model (CAPM). (Completed see chart 1)
Using the constant growth formula, calculate the value of each stock (Completed see chart 2)
Compare the values you calculated in questions 1 & 2. Do the values closely approximate the stocks market price? If not why not? (Please help answer)
What do your results mean for Gloria? (Gloria has $75,000 to invest in 15 stock)
How does your result affect the market efficiency theory. (Please answer)
Rating | Beta | Required rate of return |
1 | 0.65 | 9.24% |
2 | 2.30 | 21.78% |
3 | 1.89 | 18.66% |
4 | 1.20 | 13.42% |
5 | 1.35 | 14.56% |
6 | 0.67 | 9.39% |
7 | 1.78 | 17.83% |
8 | 0.95 | 11.52% |
9 | 0.92 | 11.29% |
10 | 1.50 | 15.70% |
11 | 0.85 | 10.76% |
12 | 0.38 | 7.19% |
13 | 0.71 | 9.70% |
14 | 1.00 | 11.90% |
15 | 0.73 | 9.85% |
A Dividend | B Dividend | C Required Return | D Required Return Dividend Growth | E Expected Dividend | F Stock Value |
$0.95 | 0.65% | 9.24% | 8.59% | $0.96 | $11.14 |
$0.00 | -100.00% | 21.78% | 121.78% | $0.00 | $0.00 |
$0.00 | 0.00% | 18.66% | 18.66% | $0.00 | $0.00 |
$1.30 | 6.25% | 13.42% | 7.17% | $1.38 | $19.26 |
$0.75 | 0.95% | 14.56% | 13.61% | $0.76 | $5.56 |
$6.00 | 5.00% | 9.39% | 4.39% | $6.30 | $143.51 |
$0.00 | 0.00% | 17.83% | 17.83% | $0.00 | $0.00 |
$0.68 | 0.75% | 11.52% | 10.77% | $0.69 | $0.00 |
$5.00 | 0.38% | 11.29% | 10.91% | $5.02 | $6.36 |
$0.00 | -90.00% | 15.70% | 105.70% | $0.00 | $46.00 |
$2.00 | 2.25% | 10.76% | 8.51% | $2.05 | $0.00 |
$0.00 | -1.00% | 7.19% | 8.19% | $0.00 | $24.03 |
$6.00 | 5.25% | 9.70% | 4.45% | $6.32 | $0.00 |
$1.00 | 8.00% | 11.90% | 3.90% | $1.08 | $27.69 |
$1.35 | 8.85% | 9.85% | 1.00% | $1.47 | 146.94 |
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