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The Finance concept of Stocks and Bonds Valuation needs to applied, when answering the questions. Q 1 JW Corp has paid a dividend of $0.50.
The Finance concept of Stocks and Bonds Valuation needs to applied, when answering the questions. | |
Q 1 | JW Corp has paid a dividend of $0.50. The dividend is expected to grow at a 6% rate over time. Based on the stock's risk, investors require an 11-percent rate of return. Using the constant dividend growth model, what should the stock's price be? |
Q 2 | Lerman Company has preferred stock outstanding. It pays an annual dividend of $10. If its current price is $70, what is the discount rate investors are using to value the stock? |
Q 3 | The French Thaler and Company's stock has paid dividends of $1.60 over the past 12 months. Its historical growth rate of dividends has been 8 percent but analysts expect the growth to slow to 5 percent annually for the foreseeable future. Determine the value of the stock if the required rate of return on stocks of similar risk is 15 percent. |
Q 4 | A $1,000 face value bond issued by the Dysane Company currently pays total annual coupon of $79 per year and has a 13-year life. What is the present value, or worth, of this bond if investors are currently willing to accept a 10 percent annual rate of return on bonds of similar quality if the bond is a Eurobond? |
Q 5 | How would your answer in Question 4 change if the bond is a U.S. bond? |
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To answer these questions we need to apply the concepts of stock and bond valuation Here are the solutions Q1 JW Corp Stock Price Calculation using th...
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