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##### 5-4 A price-weighted index consists of stocks A, B, and C which are priced at \$38, \$21, and \$26 a share,

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5-4 A price-weighted index consists of stocks A, B, and C which are priced at \$38, \$21, and \$26 a share, respectively. The current index divisor is 2.7. What will the new index advisor be in stock B undergoes a 3-for-1 stock split?;6-1 The Fish House increases its dividend each year. The next annual dividend is expected to be \$2.21 a share. Future dividends will increase by 3.5% annually. What is the current value of this stock if the discount rate is 14%;6-2 DT Industries stock is valued at \$9.60 a share. The firm pays annual dividends at an increasing rate of 2% annually. Next year's dividend will be \$1.20 per share. What is the required return on this stock?;6-3 The Rug Barn has paid annual dividends of \$1.30, \$1.36, \$1.40, \$1.42, and \$1.45 over the last 5 years, respectively. What is the geometric average dividend growth rate?;6-4 The Potato Patch has a retention ratio of.80 dividends of \$52,000, and total equity of \$3.3 million. What is the firm's sustainable rate of growth?;6-5 Quality Home Made Ice Cream has plans to pay decreasing annual dividends of \$2, \$1.50, and \$1.00 over the next three years, respectively. After that, the firm will increase the dividend by 3% each year. What is the value of this stock today at a discount rate of 9%?;6-6 Leslie Apparel has a current book value per share of \$5.86 and current earnings per share of \$1.13. The required return is 14% and the expected earnings growth rate is 4.5%. What is one share of this stock worth today?;2-12 Five months ago, you purchased 300 shares of stock on margin. The initial margin requirement on your account is 60% and the maintenance margin is 30%. The call money rate is 4.2% and you pay 1.75% above that rate. The purchase price was \$18. a share. Today, you sold these shares for \$21 each. What is your annualized rate of return?;2-14 Jennifer believes that Northern Wine stock is going to decline in value so she is short selling 800 shares at \$46. a share. Her initial margin requirement is 70% and the maintenance margin in 30%. What is the highest the stock price can go before she receives a margin call?

Paper#31896 | Written in 18-Jul-2015

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