EC 545: Financial Economics Arindam Bandopadhyaya – Spring 2013 Meeting Notes - Set 5 – Stock Pricing Fundamentals and Assigned Problems from Chapter 8 in Readings Package Stock price as a sum of discounted value of all dividend payments received by the stockholder until infinity Price of a preferred stock that pays constant dividend Price of a stock that pays a dividend that grows at a constant rate The required rate of return of a stock is the sum of dividend yield and capital gains yield;
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f_t=〖(1+r_t)〗^t/〖(1+r_(t-1))〗^(t-1) -1=〖DF〗_(t-1)/〖DF〗_t -1 Plugging in the discount factors from (a) we get the forward rates: f_1=1/〖DF〗_1 -1=1/0.9346-1=0.069976≅7.00% f_2=〖DF〗_1/〖DF〗_2 -1=0.9346/0.8767-1=0.066043≅6.60% f_3=〖DF〗_2/〖DF〗_3 -1=0.8767/0.8255-1=0.062023≅6.20% (c) What should the price of a 3-year bond with a face value of $100 and a 6% annual coupon be? We calculate the bond price by discounting the annual cash flows by the discount factors from (a): P=〖DF〗_1*〖CF〗_1+〖DF〗_2*〖CF〗_2+〖DF〗_3*〖CF〗_3
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polynomial resulting from step one, using these formula’s: P = $2000 & r = 10% and also P = $5670 & r = 3.5%. I will also be completing the problem 70 on page 311, and will show all the steps of the division. In this paper I will be using the following vocabulary words; like items, descending order, dividend, divisor, and FOIL (first, outer, inner, last). For the problem on page 304, problem 90, the problem states that the polynomial of an investment after one year that has the interest
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owners limited liability? 4. What are the main advantages and disadvantages of organizing a firm as a corporation? 5. Explain the difference between an S corporation and a C corporation. Chapter 2 The following is provided for use in answering the next set of questions. You may also find table 2.5 on page 53 of your text and all questions on pages 56–57. 29. In fiscal year 2011, Starbucks Corporation (SBUX) had revenue of $11.70 billion, gross profit of $6.75 billion, and net income of $1
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Established since 1976, Vinamilk has about 39 years of development and branding. Now, Vinamilk has over 200 items of milk and milk products as: condensed milk, dried milk for child and adult, fresh milk, yoghurt,… Dairy products of vinamilk has covered the domestic market from urban areas to rural and remote by business charisma. In addition vinamilk also available in 23 countries around the world. Vinamilk strive to reach the top 50 largest dairy companies in the world with sales
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says the formula is bases on years after 2010. What does this equation tell us? So what can we depict from the question? We are looking at what the equation is telling us. Which is… The explicate form of the exponential is Pn = (1+r)nPo which is the same as P0 (1+r)n. So looking at the formula given we can say that 1+r = 1.072 which means the r = 0.72 remembering that the r represents a percentage growth rate then r = 7.2%. The tuition there for is 7.2% of growth each year. Po is the tuition or the
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Week 5 – Individual Assignment Fundamentals of Macroeconomics Phillip Alfonso ECO-372 August 5, 2013 Professor: Joshua Long University of Phoenix – Online PART 1 Gross domestic product (GDP) Gross Domestic Product (GDP) is the total amount of goods and services that were produced in an economy and is represented in dollars. In the US, we record what the GDP was for the entire year, however, GDP does not always have to be in the span of one year Real GDP Real GDP is a way calculate
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Then, one day last spring, Hogan got a letter from Morgan Stanley (MS ) that promised to solve all of his problems. The bank suggested Hogan could lease the road to a private investor and raise enough money to pay off the whole chunk of debt. Now Hogan, after being inundated with proposals, is in hot-and-heavy negotiations with a team of bidders from Portugal and Brazil. "We literally got responses from around the world," he says. In the past year, banks and private investment firms have fallen
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GOPRO How their IPO affected them. Christian Pichardo Principles of MicroEconomics Mr. Peter Cronrath April/4/2015 TABLE OF CONTENTS Introduction………………………………………………..pg 3 GoPro……………………………………………………...pg 4- 5 IPO ………………………………………………………..pg 6 Problem……………………………………………............pg 7- 8 Solution……………………………………………............pg 9 Charts………………………………………………...........pg 10-11 References………………………………………................pg 12 INTRO The stock
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a. The stock valuation model, P0 = D1/(rs - g), can be used for firms which have negative growth rates. b. If a stock has a required rate of return rs = 12 percent, and its dividend grows at a constant rate of 5 percent, this implies that the stock’s dividend yield is 5 percent. c. The price of a stock is the present value of all expected future dividends, discounted at the dividend growth rate. d. Statements a and c are correct. e. All of the statements above are correct
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