Question
QUESTION 5 78 B C D 79 Springtime Cigarettes has found that its growth rate in earnings has been declining 80 at a constant rate
QUESTION 5
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78 B C D 79 Springtime Cigarettes has found that its growth rate in earnings has been declining 80 at a constant rate of 4.60% per year. 81 It managed to pay a dividend last year in the amount of $2.75 82 The CAPM discount rate applicable to such a security is 9.60% 83 Follow the DDM. Po = Do*(1+g) / (K - g) 84 What would you be willing to pay for the stock today? a. Intrinsic Value (Po) = $16.48
b. Intrinsic Value (Po) = $14.48
c. Intrinsic Value (Po) = $19.48
d. Intrinsic Value (Po) = $18.48
4 points
QUESTION 6
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1 B C D 2 You have collected the following information about the market and a stock of interest: 3 US treasury bonds are yielding 1.80% 4 Rate of return on a market portfolio of like stocks is 11.40% 5 The stock of interest has a beta of 2.21 6 The market has a beta of 1.00 7 The current dividend is $3.98 8 The firm registers a constant growth rate of 6.70% 9 What is the fair market value of the stock based upon DDM and CAPM? a. Fair market value (Po) = $29.93
b. Fair market value (Po) = $23.93
c. Fair market value (Po) = $27.93
d. Fair market value (Po) = $20.93
4 points
QUESTION 7
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23 B C D 24 The Abby stock pays a dividend in the amount of $5.78 25 The growth rate of dividends is a constant 6.25% 26 The current stock price is $31.00 27 The prevailing Treasury bill rate is 2.70% 28 The average return on the S&P 500 Index is 13.00% 29 The Abby Corp. is involved in wildcat drilling for oil in the midwest. 30 The stock carries a beta of 2.0 31 What is the Expected Rate of Return? 32 What is the Required Rate of Return? a. Expected Rate of Return = 36.06%
Required Rate of Return = 33.09%
b. Expected Rate of Return = 25.06%
Required Rate of Return = 25.09%
c. Expected Rate of Return = 46.06%
Required Rate of Return = 43.09%
d. Expected Rate of Return = 26.06%
Required Rate of Return = 23.09%
4 points
QUESTION 8
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1 B C D 2 Suppose that Microsoft has a recent dividend of $3.99 3 Earnings growth are expected to be strong for the next four years. 4 Year 1 Year 2 Year 3 Year 4 5 20.0% 28.0% 34.0% 37.0% 6 After the fourth year, MSFT expects a constant growth rate of 9.0% 7 The required return for MSFT is 15.00% 8 What is the intrinsic value of MSFT? a. Intrinsic Value of MSFT = $147.49
b. Intrinsic Value of MSFT = $137.49
c. Intrinsic Value of MSFT = $149.37
d. Intrinsic Value of MSFT = $173.49
4 points
QUESTION 9
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31 Beta stock does not pay any dividends as yet. 32 The firm has a required return of 18.2% on its investment opportunities. 33 Your research has found that comparable firms that actually do pay dividends, have a 34 dividend payout ratio of 48.00% 35 The firm also has earnings per share of $3.24 36 Beta Company has an ROE of 26.0% 37 38 What is the PVGO? a. PVGO = $15.43
b. PVGO = $12.43
c. PVGO = $17.43
d. PVGO = $14.53
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Finance For Housing An Introduction
Authors: Cathy Davis
1st Edition
1447306481, 978-1447306481
