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. Assume an investor uses the constant-growth DVM to value a stock. Listed are various situations that could affect the computed value of a stock. Look at each one of these individually and indicate whether it would cause the computed value of a stock to go up, go down, or stay the same. Briefly explain your answers.
- Dividend payout ratio goes up.
- Stock’s beta rises.
- Market return increases.
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- . Assume an investor uses the constant-growth DVM to value a stock. Listed are various situations that could affect the computed value of a stock. Look at each one of these individually and indicate whether it would cause the computed value of a stock to go up, go down, or stay the same. Briefly explain your answers. Dividend payout ratio goes up. Stock’s beta rises. Market return increases. Assume throughout that the current dividend (D0) remains the same and that all other variables in the model are unchanged.One stock valuation model holds that the value of a share of stock is a function of its futuredividends, and that the dividends will increase at an annual rate which will remain unchangedover time. This stock valuation model is known as the * A.approximate yield model. B.holding period return model. C.constant growth dividend valuation model. D.dividend reinvestment model.Answer this question based on the dividend growth model. If you expect the required rate of return to increase across the board on all equity securities, then you should also expect: Group of answer choices An increase in all stock values. Negative stock values. An increase or a decrease in all stock values. A decrease in all stock values. All stock values to remain constant.
- Which of the following will (holding everything else constant) cause the price earnings (P/E) ratio of a stock to decrease: The required return increases The risk-free rate decreases The stock's beta decreases The required return decreasesOne stock valuation model holds that the value of a share of stock is a function of its ends will increase at an annual rate which will remain unchangedover time. This stock valuation model is known as the * approximate yield model. holding period return model. constant growth dividend valuation model. dividend reinvestment model.Assume that you regularly invest in stocks. Explain (using intuition instead of math) how your portfolio of stocks would be affected in response to a higher risk-free rate according to the CAPM. Explain how your portfolio of stocks might be impacted during the economic growth
- You a portfolio manager. You have been provided the following information on stock prices and dividends. Based on the given information, what is the geometric average return on this stock? Please show all the calculations by which you came up with the final answer.1. The rate at which a stock's price is expected to appreciate (or depreciate) is called the yield. A. current B. total C. dividend D. capital gains 2. The underlying assumption of the dividend growth model is that a stock is worth: A. the present value of the future income that the stock generates. B. the same amount to every investor regardless of his desired rate of return. C. an amount computed as the next annual dividend divided by the market rate of retum. D. an amount computed as the next annual dividend divided by the required rate of return. 3. The total rate of return earned on a stock is composed of which two of the following? 1. current yield II. yield to maturity III. dividend yield IV. capital gains yield A. I and II only B. I and IV only C. II and III only D. III and IV only 4. Which one of the following correctly defines the constant dividend growth model? A. R = (D₁ Po) + g B. Po = (D₁R) + g C. R=(Po Do) + g D. Po = Do ] (R-g) 5. How much are you willing to pay for one…(Expected rate of return and risk) Syntex, Inc. is considering an investment in one of two common stocks. Given the information that follows, which investment is better, based on the risk (as measured by the standard deviation) and return? Common Stock A Probability 0.20 0.60 0.20 Probability 0.15 0.35 0.35 0.15 (Click on the icon in order to copy its contents into a spreadsheet.) Common Stock B Return 13% 14% 18% Return - 6% 7% 15% 21% a. Given the information in the table, the expected rate of return for stock A is 14.6 %. (Round to two decimal places.) The standard deviation of stock A is %. (Round to two decimal places.)
- ________ is a model for determining the price of a stock, based on a future series of dividends that grow at a constant rate.Consider a world that only consists of the three stocks shown in the following table: a. Calculate the total value of all shares outstanding currently. b. What fraction of the total value outstanding does each stock make up? c. You hold the market portfolio, that is, you have picked portfolio weights equal to the answer the total value of all stocks. What is the expected return of your portfolio? Data table (Click on the following icon in order to copy its contents into a spreadsheet.) Total Number Current Price per of Shares Outstanding Share Stock First Bank Fast Mover Funny Bone 107 million 46 million 207 million $111 $120 $30 part with each stock's weight is equal to its contribution to the fraction of Expected Return 17% 11% 16% XThe price of a stock is: Group of answer choices the future value of all expected future dividends, discounted at the investor’s required return. the present value of all expected future dividends, discounted at the investor’s required return. the present value of all expected future dividends, discounted at the dividend growth rate. the future value of all expected future dividends, discounted at the dividend growth rate.