13. What is the price expected at the end of the next period for the stock descr

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13. What is the price expected at the end of the next period for the stock described in the previous question? A) $12.48 B)S15.60 C) $16.64 D) $24.96 E) S31.20 9. Suppose that a stock currently sells for $30 in the stock market, has an expected dividend next period of $3.60 per share, and future dividends are expected to grow at three- percent per period. Calculate the expected return on this stock in the next period using the constant growth stock valuation model. A) 12-percent B) 13-percent C) 14-percent D) 1S-percent E) 16-percent 14. Based on the fair market value of the stock described in the previous two questions, what is the dividend yield expected in the next period. A)3096 B)24% C)22.5% D) 15% E) 12% 10. If the required return using the Capital Asset Pricing Model (CAPM) is 14-percent per period on the stock described in the previous question, then this stock is A) Undervalued B) Valued fairly C) Overvalued D) Cannot be determined without additional information 15. Based on the fair market value of the stock described in the previous three questions, what is the capital gain expected in the next perioc. A) 2% B)4% C) 10% D) 14% E) 16% 11. Given a required return of 14-percent, what is the most that should be paid for the stock described in the previous two questions? A) S30 B)$30.73 C)$31.73 D)$32.73 E)$36 16. If the stock described in the previous four questions currently sells for $16 in the market, then the stock is: A) Undervalued C) Overvalued B) Fairly priced D) Depends on how rich you are 2. Suppose a firm's stock beta is 1.4, the expected ividend next period is $3.60, and dividends are expected o grow four percent every period forever. If the expected eturn on the market is twelve-percent and the risk free rate s two percent, calculate the stock price based on the APM and constant growth stock valuation model. )S12 B)S15 C)S16 D) $24 E) S30

Explanation / Answer

9)

Expected return ( r) D1÷P0+g Here, Stock price (P0) $                   30.00 Expected dividend (D1) $                     3.60 Growth rate (g) 3.00% Expected return ( r) 15.00% $3.60/$30+3%

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