11 May IF AN INVESTOR’S REQUIRED RATE OF RETURN IS 9%, WHAT IS THE VALUE OF THE STOCK TO THAT INVESTOR?
Beaver Corp preferred stock has a market price of
$14.50. If it has a yearly dividend of $3.50, what is your expected rate of
return if you purchase the stock at its market price?
A) 41.43%
B) 19.45%
C) 22.36%
D) 24.14%
5) South Stage, Inc. preferred stock pays an annual
dividend of $2.75 per share. If the stock is currently selling for $27.50 per
share, what is the expected rate of return on this stock?
A) 2.75%
B) 10.0%
C) 17.5%
D) 27.5%
6) Jackson Corp. common stock paid $2.50 in dividends last
year (D0).
Dividends are expected to grow at a 12-percent annual rate forever. If
Jackson’s current market price is $40.00, what is the stock’s expected rate of
return (nearest .01 percent)?
A) 5.50%
B) 11.00%
C) 18.25%
D) 19.00%
7) U.S Technologies preferred stock
sells for $80 and pays $9 each year in dividends. What is the expected rate of
return?
8) You purchased one share of
Sophia Enterprises common stock for $30 today. If the stock pays a dividend of
$6.50 in one year, and sells for $32.50 at that time, what will the dividend
yield, growth rate, and total rate of return be for the year?
9) Tannerly Worldwide’s common
stock is currently selling for $48 a share. If the expected dividend at the end
of the year is $2.40 and last year’s dividend was $2.00, what is the rate of
return implicit in the current stock price?
10)
Miller’s preferred stock is selling at $54 on the market and pays an annual
dividend of $4.20 per share.
a. What is the expected rate of return on the
stock?
b. If an investor’s required rate of return is
9%, what is the value of the stock to that investor?
c. Considering the investor’s required rate of
return, does this stock seem to be a desirable investment?
11) The common stock of Cranberry
Inc. is selling for $26.75 on the open market. Next year’s dividend is expected
to be $3.68, and the growth rate of this company is estimated to be 5.5%. If
Richard Dean, an average investor, is considering purchasing this stock at the
market price, what is his expected rate of return?
4) Beaver Corp preferred stock has a market price of
$14.50. If it has a yearly dividend of $3.50, what is your expected rate of
return if you purchase the stock at its market price?A) 41.43%B) 19.45%C) 22.36%D) 24.14% 5) South Stage, Inc. preferred stock pays an annual
dividend of $2.75 per share. If the stock is currently selling for $27.50 per
share, what is the expected rate of return on this stock?A) 2.75%B) 10.0%C) 17.5%D) 27.5% 6) Jackson Corp. common stock paid $2.50 in dividends last
year (D0).
Dividends are expected to grow at a 12-percent annual rate forever. If
Jackson’s current market price is $40.00, what is the stock’s expected rate of
return (nearest .01 percent)?A) 5.50%B) 11.00%C) 18.25%D) 19.00% 7) U.S Technologies preferred stock
sells for $80 and pays $9 each year in dividends. What is the expected rate of
return? 8) You purchased one share of
Sophia Enterprises common stock for $30 today. If the stock pays a dividend of
$6.50 in one year, and sells for $32.50 at that time, what will the dividend
yield, growth rate, and total rate of return be for the year? 9) Tannerly Worldwide’s common
stock is currently selling for $48 a share. If the expected dividend at the end
of the year is $2.40 and last year’s dividend was $2.00, what is the rate of
return implicit in the current stock price? 10)
Miller’s preferred stock is selling at $54 on the market and pays an annual
dividend of $4.20 per share.a. What is the expected rate of return on the
stock?b. If an investor’s required rate of return is
9%, what is the value of the stock to that investor?c. Considering the investor’s required rate of
return, does this stock seem to be a desirable investment? 11) The common stock of Cranberry
Inc. is selling for $26.75 on the open market. Next year’s dividend is expected
to be $3.68, and the growth rate of this company is estimated to be 5.5%. If
Richard Dean, an average investor, is considering purchasing this stock at the
market price, what is his expected rate of return?
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