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- A stock is trading at $80 per share. The stock is expected to have a yearend dividend of $4 per share (D1 = $4), and it is expected to grow at some constant rate, g, throughout time. The stock’s required rate of return is 14% (assume the market is in equilibrium with the required return equal to the expected return). What is your forecast of gL?A share of stock with a beta of 0.8 currently sells for $50. Investors expect the stock to pay a year-end dividend of $5. The T-bill rate is 1%, and the market risk premium is 6%. If the stock is perceived to be fairly priced today, what much be investors' expectation of the price of the stock at the end of the year? $_ Hint: [CAPM] Expected Return (R) = R₁ + Beta*Market Risk Premium; Expected Return (R) = Dividend Yield + Capital Gains Yield, where dividend yield= D₁/P and capital gains yield = (P₁-Po)/PoA share of stock with a beta of 0.8 currently sells for $50. Investors expect the stock to pay a year-end dividend of $5. The T-bill rate is 1%, and the market risk premium is 6%. If the stock is perceived to be fairly priced today, what much be investors' expectation of the price of the stock at the end of the year? $_ Hint: [CAPM] Expected Return (R) = Rf + Beta *Market Risk Premium; Expected Return (R) = Dividend Yield + Capital Gains Yield, where dividend yield=D1/PO and capital gains yield = (P1-Po)/PO
- Both a call and a put currently are traded on stock XYZ; both have strike prices of $50 and expirations of 6 months. What will be the profit to an investor who buys the call for $4 in the following scenarios for stock prices in 6 months? What will be the profit in each scenario to an investor who buys the put for $6?a. $40b. $45c. $50d. $55e. $60Assume you think the right P/E for a stock is 20 (now and over the next few years). You think there's a 25% chance the firm earns $2 next year, a 40% chance the firm earns $2.50 next year and 35% chance the firm earns $3 next period. If the stock trades at $45 today and pays out all earnings as dividends, your expected return from buying today is _%? (Round to the nearest whole percent) Please answer fast I give you upvoteWhat is the most you should be willing to pay for the stock in the table? Expected Expected Price in 1Dividend in 1 year Required Current Return Price Year $376.29 $3.91 5.80% $89.00
- The current price of a stock is $20 per share. You have $10,000 to invest. You borrow an additional $20,000 from your broker and invest $30,000 in the stock. If the maintenance margin is 30 percent, at what price will a margin call first occur? O A. $19.05 O B. $17.86 O C. $14.28Consider a stock with a current price of P $27 Suppose that over the next 6 months the stock price will either go up by a factor of 1.41 or down by a factor of 071. Consider a call option on the stock with a strike price of $25 that expires in 6 months. The nsk-free rate is 6%. (1) Using the binomial model, what are the ending values of the stock price? What are the payoffs of the call option? (2) Suppose you write one call option and buy N shares of stock How many shares must you buy to create a portfolo with a riskless payoff Ge, a hedge portfolio)? What is the payoff of the portfolio? 13)What.is the.present.value of the hedge port- Tolot What &the value of phe calt.option? (4) What s a teplieatirg portfolio What is 2otrage?Required: A share of stock is now selling for $75. It will pay a dividend of $6 per share at the end of the year. Its beta is 10. What must investors expect the stock to sell for at the end of the year? Assume the risk-free rate is 5% and the expected rate of return on the market is 13% (Round your answer to 2 decimal places) Answer is complete but not entirely correct. $ 80.00 Ⓒ
- A stock is expected to pay a dividend of $1.00 at the end of the year (i.e., D1 = $1.00), and it should continue to grow at a constant rate of 10% a year. If its required return is 15%, what is the stock's expected price 1 year from today? Do not round intermediate calculations. Round your answer to the nearest cent.A share of stock with a bela of 0 8 currently sells for $50 Investors expect the stock to pay a year-end dividend of $5. The T-bil rate is 1%, and the market risk premium is 6%. If the stock is perceived to be fairly priced today, what much be investors expectation of the price of the stock at the end of the year? S Hint (CAPM Expected Return (R)-R Beta Market Risk Premium Expected Retum (R)-Dividend Yield Capital Gains Yield, where dividend yield DyPo and capital gains yield (P1-PoPoA stock is expected to pay a dividend of $0.75 at the end of the year. The required rate of return is rs = 10.5%, and the expected constant growth rate is g = 9%. What is the stock's current price? Select the correct answer. a. $46.00 b. $48.00 c. $47.00 d. $50.00 e. $49.00
