3. Two of the major investment markets in the United States are the New York Sto

Question

3. Two of the major investment markets in the United States are the New York Stock Exchange and NASDAQ. Explain the major differences between the two, including a discussion of how you would use each to purchase investments.

4.You are interested in investing in the stock of ABC company. The stock is expected to pay a yearly dividend of $1.60 per share next year, with dividends increasing 3% per year after that. The market rate of return on similar stock is 8%. What is the current value per share of the stock? What would the value be if the market rate of return went up to 11%?

Explanation / Answer

The new york stock exchange (NYSE) is a physical exchange ,with a hybrid market for placing orders both electronically and manually on trading floor.

ON the other hand ,NASDAQ is a virtual listed exchange ,where all trading is done over the computer network .

4)if rate of return = 8%

curremy price = 1.60 /(.08 - .03 ))

                    = 1.60 / .05

                   = $ 32 per share

If Rate = 11 %

Price = 1.60 / (.11 -.03)

         = 1.60 / .08

         = 20 per share

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