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The risk-free rate of return is 55%, the expected rate of return on the market portfolio is 14%, and the stock of Xyrong Corporation has
The risk-free rate of return is 55%, the expected rate of return on the market portfolio is 14%, and the stock of Xyrong Corporation has a beta coefficient of 19 Xyrong pays out 50% of its earnings in dividends and the latest earnings announced were $750 per share Dividends were just paid and are expected to be paid annually. You expect that Xyrong will earn an ROE of 18% per year on all reinvested earnings forever a. What is the intrinsic value of a share of Xyrong stock? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Intrinsic value b. If the market price of a share is currently $27 and you expect the market price to be equal to the intrinsic value one year from now. what is your expected 1 year holding period return on Xyrong stock? (Do not round intermediate calculations, Round your answer to 2 decimal places.) Famaria on-ear haldinnnnnine ratom
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