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6.The Bradshaw company's most recent dividend was...




6.The Bradshaw company's most recent dividend was $6.75. The historical dividend payment by the company shows a constant growth rate of 5% per year. What is the maximum you would be willing to pay for a share of its common stock if your required rate of return is 8% 7. Xiao Xin owns stock in a company which has paid the annual dividends shown in below table calculate the growth rate of these dividends. Table Dividends 2003 2.89 2002 2.53 2001 2.22 2000 1.95 1999 1.71 1998 1.50 8.Based upon analysis of the company and expected industry and economic conditions, China imports is expected to earn $4.60 per share of Common stock next year. The Average price/earnings ratio for firms in the same industry is 8. Calculate the estimated Value of a share of China Imports Common Stock. 9.A Firm issued 10,000 Shares of $2 par-value common stock, receiving proceeds of $40 per share. The accounting entry for the paid-in capital in excess of par account is 10.At year end, Tangshan China Company balance sheet showed total assets of 60 millions, total liabilities(including preferred stock) of 45 million dollars and 1,000,000 shares of common stock outstanding. If Tangshan could sell its assets for 52.5 Million, Tangshan's liquidation value per share of common stock is 11.Perry purchased 100 shares of Ferro, Inc. common stock for $25 per share one year ago. During the year, Ferro Inc. paid cash dividends of $2 per share. The stock is currently selling for $30 per share. If Perry sells all of his shares of Ferro Inc. today, what rate of return would he realize ? 12.The Expected value and the standard deviation of returns for Asset A is (see below) Asset A Possible Outcomes Probability Returns(%) Pessimistic 0.25 10 Most Likely 0.45 12 Optimistic 0.30 16 13.Asset P has a beta of 0.9. The risk-free rate of return is 8%, while the return on the market portfolio of assets is 14%. The asset's required rate of return is ??? 14.A firm has issued cumulative preferred stock with a $100 dollar par value and a 12% annual dividend. For the past two years, the board of directors has decided not to pay a dividend. The preferred stockholders must be paid________________ prior to paying the common stockholders. 15.Tangshan China stock is currently selling for $160 per share and the firm's dividends are expected to grow at 5% indefinitely. In addition, Tangshan China's most recent dividend was 5.50. The expected risk free rate of return is 3 %, the expected market return is 8%, and Tangshan has a beta of 1.20. A. What is the expected return based on the dividend return model? B. What is the required return based upon capm C. Would Tangshan China be a good investment at this time? Explain? 16. Mia's Doll Company has an outstanding preferred issue of stock with a par value of $100 and an annual dividend of 10%(of par). Similar Risk preferred stocks are yielding an 11.5% annual rate of return. A. What is the current value of the outstanding preferred stock? B.What will happen to prices as the risk free rate increases? Explain? 17.Champion Breweries must choose between two assets purchases. The annual rate of return and related probabilities given below summarize the firm's analysis. Asset A Assets B Rate of Return Probability Rate of Return Probability 10% 30% 5% 40% 15% 40% 15% 20% 20% 30 25% 40% For each asset compute: A. Expected Rate of Return? B. The standard deviation of the return? C.The coefficient variation of the return? D.Which asset should champion chose? 18.Given the following probability distribution for assets x and y, compute the expected rate of return, variance, standard deviation, and coefficient of variation for the two assets. Which asset is a better investment? X Y Return Probability Return Probability 8% .10 10% .25 9% . 20 11% .35 11% . 30 12% .40 12% .40 19.You are going to invest $20,000 in portfolio consisting of assets x, y, z, as follows: Asset Annual Return Probability Beta Proportion X 10% .50 1.2 .33333 Y 8% .25 1.6 .33333 Z 16% .25 2.0 .33333 A. Giving the information in the above table, what is the expected annual return of this portfolio? B. What is the beta of this portfolio? 20. Dr. Ray is considering investment in a project with a beta coeffciant of 1.75. What would you recommend him to do if this investment has an 11.5% rate of return, risk free rate is 5.5%, and the rate of return on the market portfolio of assets is 8.5 % ? 21.Asset Y has a beta of 1.2. The risk free rate of return is 6%, while the return on the market portfolio is 12%. The assets market risk premium is ? 22.Assuming a risk-free rate of 8% and a market return of 12%, would a wise investor acquire a security with a beta of 1.5 and a rate of return of 14% given the facts above ?


Paper#8480 | Written in 18-Jul-2015

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