Chapter 9 Kahoot

Do = $1, expected growth 4% yearly, req rate of return = 10%. How much would you pay for this stock?

$17.33

Do = $1.50, rs = 10.1%, constant growth is g = 4.0%. What is current stock price?

$25.57

Stock sells for $24.50. Dividend constant growth 5.5%. Required rate of return = 9%. Stock's expected price 3 yrs from now?

$28.77

Stock required rate of return = 10.25%, sells for $87.50, dividend constant growth = 6%. What is expected year-end dividend D1?

$3.72

Perpetual preferred stock annual dividend = $2.00. If required rate of return is 6.5%, what price should stock sell for?

$30.77

If D1 = $1.25, g (which is constant) = 4.7%, and Po = $26.00, what is stock's expected dividend yield?

4.81%

If D1 = $1.25, g (constant) = 5.5%, Po = $44, what is stock's expected total return for coming year?

8.34$

The corporate valuation model can be used only when a company doesn't pay dividends

False

If you believe that stock's expected return exceeds its required return, then...

The stock is a good buy

Diversification will normally reduce the riskiness of a portfolio of stocks

True

Risk-averse investor require higher return rates on investments with highly uncertain returns

True

The total rate of return earned on stock is comprised of dividend yield & capital gains yield

True