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thank you 5. Consider the table below giving some valuation characteristics for each of stocks A.B.C. and D. Assume that the CAPM holds and that
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5. Consider the table below giving some valuation characteristics for each of stocks A.B.C. and D. Assume that the CAPM holds and that the risk-free interest rate is 5%. For each part explain what assumptions you need to make. Share Expected Dividend Plowback Earnings Return CAPM price return yield ratio growth rate beta equity Stock A Stock B Stock Stock D 50% 40% 41.50 80.00 62.00 46.00 10.4% 12.2 9.29 3.2 0.7 40% 1.25 a. What is the ROE of Stock A. b. What is the dividend yield of stock B c. What is the Present Value of Growth Opportunities (PVGO) implicit in the price of Stock C? d What is the earnings growth rate for stock D? 5. Consider the table below giving some valuation characteristics for each of stocks A.B.C. and D. Assume that the CAPM holds and that the risk-free interest rate is 5%. For each part explain what assumptions you need to make. Share Expected Dividend Plowback Earnings Return CAPM price return yield ratio growth rate beta equity Stock A Stock B Stock Stock D 50% 40% 41.50 80.00 62.00 46.00 10.4% 12.2 9.29 3.2 0.7 40% 1.25 a. What is the ROE of Stock A. b. What is the dividend yield of stock B c. What is the Present Value of Growth Opportunities (PVGO) implicit in the price of Stock C? d What is the earnings growth rate for stock DStep by Step Solution
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