Question
Question 1 a)Stock KTM will pay a dividend of $1 one year from today, with a dividend growth rate of 5% thereafter. If KTMs market
Question 1
a)Stock KTM will pay a dividend of $1 one year from today, with a dividend growth rate of 5% thereafter. If KTMs market capitalization rate is 15%, what is its expected stock value two years from today?
| A. | $14.42 | |
| B. | $13.24 | |
| C. | $12.09 | |
| D. | $11.03 |
b) Lock-Down Airlines (LA) is expected to pay a dividend of $3 next year, and its subsequent dividends are expected to grow at a rate of 10% per year. LA has a beta of 4. The current risk-free rate is 4% and the market return is 13%. What is the intrinsic value of LA?
| A. | $10.00 | |
| B. | $22.74 | |
| C. | $27.79 | |
| D. | $41.66 |
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
Finance And Financial Markets
Authors: Keith Pilbeam
4th Edition
1137515627, 978-1137515629
