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- a. All future prices and future dividends are expected values OTrue OFalse b. Shareholders elect: Cofficers OManagers ODirectors Oinvestors c. If Do= $2and dividends are expected to grow at a rate g = 5% then D7 !! O$2.68 OS2.1 O$1.39 O$2.81 d. The market price of a share is always equal to the estimated price of a share. OTrue OFalse e. A share with voting rights is more valuable than a share without voting rights OTrue OFalse Give your reasons(3) According to the Dividend-Discount Model Equation, the price of the stock today (Po) is equal to the present value of all of the expected future dividends (e.g., Divi, Div..., Divx) investors will receive, along with the cash flow from the sale of the stock (i.e., Ps) in year N (see, the following Equation). Div Div ₂ + L + 1+FE (1+E)² Po = + PN Div N (1+re)^ *(1+r)^ List three practical challenges (i.e., limitations) when using the Equation to calculate stock price (Po) in practice.You have the following share price of XYZ. DATE Price 2-Mar-2021 $100 3-Mar-2021 $60 4-Mar-2021 $40 5-Mar-2021 $100 Investor A bought 100 shares of XYZ on 2-Mar-2021 and sold all the shares on 5-Mar-2021. Which answer is the closest value to the geometric average rate of return for the investor? A. 15% B. 20% C. 25% D. 0%
- 3. What is the intrinsic value of a share of stock if expected dividends are $8/share and the expected price year is $90/share? Assume a discount rate of 10%. What is the expected return and what should be the decision from an investor?. in 1Estimate its cost of common equity, Maxell and Associcates recently hired you. Obtain the following data, D0=$0.90, P0= $27.50, gl=7% constant. Based on the dividend grwoth model, What is the cost of common for reinvested earnings? (10.50%,9.29%,10.08%,9.68%,10.92%)1. A share has just paid a dividend of OMR2.00. The dividend is expected to grow constantly at 20% and the required return on similar shares is 8%. What price is the share? A. OMR20.00 B. Approximately OMR16.67 C. OMR18.00 D. It cannot be calculated
- The dividend-growth model may be used to value a stock: Do(1+9) V = k - g Round your answers to the nearest cent. a. What is the value of a stock if: Do = $3.10 k = 12% 9 = 8% b. What is the value of this stock if the dividend is increased to $4.30 and the other variables remain constant? $ c. What is the value of this stock if the required return declines to 9 percent and the other variables remain constant? d. What is the value of this stock if the growth rate declines to 5 percent and the other variables remain constant? e. What is the value of this stock if the dividend is increased to $3.70, the growth rate declines to 5 percent, and the required return remains 12 percent? $A. If a security offers a dividend amounting to P 5.23/ share and an investor purchased 200 shares at P 77.50/share, what is his Total Investment Return at the end of the year if the share price increased by 8%? Based on the given above, compute for the Dividend Yield Rate, Capital Gains Rate, and Total Investment Return Rate. Dividend Yield Rate: Dt+1/Pt = (P5.23+1/77.50) = 0.06748 or 6.748% Capital Gains Rate: (Pt+1-Pt) /Pt = 77.50 x 8%= 6.2 = 77.50/6.2= 83.7 = 83.7-77.50 = 6.2/77.50 = 0.08 or 8% Total Investment Return Rate: (Dt+1+Pt+1-Pt) /Pt = (5.23+1+83.7-77.50)/ 77.50 = 0.147 or 14.7%An equity share costing Rs.100/- pays no dividends. The possible prices that the share might sell for at year end and, the respective probability are as follows: 一T Year end Price (Rs) Probability 90.00 0.1 100.00 0.2 105.00 0.4 110.00 0.2 120.00 0.1 a) What is the expected return of the share? b) What is the standard deviation of the share?
- A. What is the investor's required rate of return for Green Gadgets' stock? ________% (round to two decimal paces) B. Assuming that the investor's required rate of return for Green Gadget's stock does not change, what would you expect to happen to the price of its common stock if it cuts dividend to $3? $_______ (round to the nearest cent) C. Should Green Gadgeds cut its dividend? ( select from the drop down menus) Green Gadgets Should / Should not cut the dividend because cutting the dividend will increase / decrease the value of the common stock.The dividend yield (i.e. D1/P0) is a good measure of the expected return on a common stock under which of the following circumstances? g = 0 g > 0 g < 0 g is expected to remain constant over time under no circumstances(a) Compute the expected book value per share at time 1. (b) Compute the expected earnings per share of DTI at time 2. (c) Compute the expected value of the ex-dividend stock price at time 2. (d) Compute the expected value of the ex-dividend stock price at time 0. (e) Compute the expected return (over a single-period) on the stock of DTI at time 0 (in %).
