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;
Words: 543 - Pages: 3
American InterContinental University FINA310-1301A-02: Professor Michael James March 5, 2013 Abstract This assignment will use the CGM and the CAPM to calculate some information regarding the XYZ stock market. XYZ Stock Market Information Krf=2% XYZ’s beta =1.64 XYZ’s current annual dividend = $.80 XYZ’s 3-year dividend growth rate (g) = 8.2% Industry P/E = $4.87 KS= (Risk Free Rate) + Beta (Market Premium) KS= (0.2) + 1.64 (.075) KS= (0.2) +
Words: 444 - Pages: 2
all your work. Each question has a different point value. PROBLEM 1 (2 points) | | | | | | | Find the following values for a lump sum assuming annual compounding: | | a. The future value of $500 invested at 8 percent for one year | | | b. The future value of $500 invested at 8 percent for five years | | | c. The present value of $500 to be received in one year when the opportunity cost rate is 8 percent | d. The present value of $500 to be received in five years when the opportunity
Words: 389 - Pages: 2
47 c. 8,500.00 and 7,244.57 d. 8,544.47 and 7,700.00 2) You invest $1,234.56 at 5% compounded annually. How many years will it take to triple your money? a. 18.85 b. 22.52 ** c. 14.21 d. 28.41 3) You want to buy a new car but you will need to obtain a bank loan to do so. You can afford up to $400 per month in loan repayments. Your bank will lend you money at a stated rate of 9% with monthly compounding. If you can make monthly payments at the end of each month for five years, what is the most expensive
Words: 1471 - Pages: 6
more risk than others that could be pursued with the same resources. A common method for evaluating a hurdle rate is to apply the discounted cash flow method to the project, which is used in net present value models. The hurdle rate determines how rapidly the value of the dollar decreases out in time, which, parenthetically, is a significant factor in determining the payback period for the capital project when discounting forecast savings and spending back to present-day terms. Most companies use a
Words: 791 - Pages: 4
Questions 1. The valuation of financial assets is based on the required rate of return to security holders. This, in turn, becomes the cost of financing (capital) to the corporation. 2. The valuation of a financial asset is equal to the present value of future cash flows. 3. Because BCE, Inc. has less risk than Air Canada, BCE, Inc. has relatively high returns and a strong market position; the latter firms have had financial difficulties. 4. The three factors that influence the demanded
Words: 5361 - Pages: 22
BUSINESS VALUATION METHODS (All Valuations MUST BE based on Historical Data) I. Adjusted Book Value Take the Book Value of net worth -assets not acquired +liabilities not assumed +fair market value of assets acquired +any net worth adjustments =Adjusted Book Value ____________________________________________________________ II. Capitalized Adjusted Earnings First Step: Adjust Historical Earnings Seller’s Discretionary Cash Flow Net Profit +Officer’s salary +Discretionary expenses -New Owner salary
Words: 1274 - Pages: 6
上升星座分析 该星盘的上升星座是：巨蟹座 27°31'30"4 上升星座为巨蟹座的人温文儒雅，内心充满爱，给人温暖亲切之感。火相、风相太阳星座遇上升巨蟹座，内心的情感会更丰富，有利思考，平和心境。而火相太阳星座遇之，直觉会更加敏锐，既坚强又感性，常常会把灿烂、亲切的笑容挂在脸上，让人想要亲近。水相太阳星座遇到则会更为内敛，柔柔的，充满温情，但依赖之心也更加强烈。 上升位于巨蟹座：母性、家庭、爱 优点：照顾，仁爱，勤俭。 缺点：情绪化，斤斤计较，没有自信。 上升代表：灵魂，外在行为，生活态度。 基本特质： 上升星落在巨蟹座的人有关怀和照顾别人的母性本能，但你的内心却很敏感且容易受到伤害。你有点怕生，但很容易亲近，是非常亲切而勤奋的人。 上升星座巨蟹座具体特质： 上升星落入巨蟹座的你很懂得保护自己，你虽然会对不熟悉的人表示出关怀之意，但你绝不会说出自己内心的感觉。除非你们已经相互了解并累积了不少的感情，你才会解除安全戒备措施，开始信任对方并分享心事。由于你将许多的事都藏在心里，加上你又有些敏感，情绪会显得比较多
Words: 420 - Pages: 2
must search for a job, he has remained intellectually active. Which term best describes Bob’s activity? a. Moral Hazard b. Screening c. Adverse Selection d. Signaling 3. A three-year bond has 8.0% coupon rate and face value of $1000. If the yield to maturity on the bond is 10%, calculate the price of the bond assuming that the bond makes semi-annual coupon interest payments. (Chapter 2 & 3) a. $857.96 b. $949.24 c. $1057.54 d. $1000.00
Words: 731 - Pages: 3
with a zero salvage value and has a (marginal) income tax rate of 40 percent. The firm’s cost of capital is 12 percent. a. Compute the internal rate of return and the net present value. a. NINV = $20,000 and NCF = (5000 4000)(1 .4) + 4000 = $4600/year $20,000 = $4,600∙(Interest factor for 5 years). 20,000/4,600 = 4.3478. Interest factor = 4.3478, which helps to find the internal rate of return (IRR) of this project. This interest factor represents the present value of a $1 annuity for
Words: 1078 - Pages: 5
