10-6) Oxygen Optimization stock has an expected annual return of 16.13 percent. The stock is expected...

10-6)

Oxygen Optimization stock has an expected annual return of 16.13 percent. The stock is expected to be priced at 93.93 dollars per share in 1 year and the stock currently has an expected dividend yield of 6.82 percent. What is the current price of the stock?

Expert Solution

Stock price today = $86.4

--------------------------------------------------------------------------------------------------------------------------

Dividend yield = dividend / share price

0.0682 = dividend/93.93

Dividend net year = $6.41

Stock price next year = 93.93

Expected return = 16.13%

Current price of stock = discounted value of stock price and dividend

= (93.93 + 6.41)/(1+ 0.1613)

= 100.34/1.1613

= $86.4

--------------------------------------------------------------------------------------------------------------------------

Feel free to comment if you need further assistance J

Pls rate this answer if you found it useful.

jeff jeffy answered 2 weeks ago

Stock S is expected to return 12 percent in a boom and 6 percent in a...

Stock S is expected to return 12 percent in a boom and 6 percent in a normal economy. Stock T is expected to return 20 percent in a boom and 4 percent in a normal economy. There is a 40 percent probability that the economy will boom; otherwise, it will be normal. What is the portfolio variance if 30 percent of the portfolio is invested in Stock S and 70 percent is invested in Stock T? A. .002220 B. .008080 C. .006224 D....

A stock has a beta of 0.6 and an expected return of 10 percent. A risk-free...

A stock has a beta of 0.6 and an expected return of 10 percent. A risk-free asset currently earns 4.1 percent. a. What is the expected return on a portfolio that is equally invested in the two assets? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) b. If a portfolio of the two assets has a beta of 0.57, what are the portfolio weights? (Do not round intermediate calculations. Enter your answers...

Violet Sky Consulting stock has an expected return of 17.54 percent and pays annual dividends that...

Violet Sky Consulting stock has an expected return of 17.54 percent and pays annual dividends that are expected to grow annually by 3.8 percent forever. The firm’s next dividend is expected in 1 year from today. If the firm’s dividend is expected to be 12.75 dollars in 6 years from today, then what is the current price of the stock?

The common stock of Etisalat has an expected return of 11 percent. The return on the...

The common stock of Etisalat has an expected return of 11 percent. The return on the market is 3 percent and the risk-free rate of return is 19 percent. What is the beta of this stock? Answer in 2 decimal places

A stock has an expected return of 12.66 percent. The beta of the stock is 1.5...

A stock has an expected return of 12.66 percent. The beta of the stock is 1.5 and the risk-free rate is 5 percent. What is the market risk premium? (Answer in a percentage, but do not include the % sign and round to two decimal places, i.e., 18.35)

Red Royal Industrial stock pays quarterly dividends and has an expected annual return of 15.88 percent....

Red Royal Industrial stock pays quarterly dividends and has an expected annual return of 15.88 percent. The stock is expected to have a price of 111.23 dollars in 3 months from today and is expected to have a price of 111.43 dollars in 6 months from today. What is the current price of Red Royal Industrial stock if the firm is expected to pay quarterly dividends forever and the quarterly dividend in 3 months from today is expected to be...

The common stock for Etisalat has an expected return of 9 percent.

The common stock for Etisalat has an expected return of 9 percent. The return on the market is 5 percent and the risk-free rate is 16 percent. What is the beta of this stock?

Stock A has an expected return of 20 percent and a standard deviation of 38 percent....

Stock A has an expected return of 20 percent and a standard deviation of 38 percent. Stock B has an expected return of 26 percent and a standard deviation of 42 percent. Calculate the expected return and standard deviations for portfolios with the 6 different weights shown below assuming a correlation coefficient of 0.28 between the returns of stock A and B. WA WB 1.00 0.00 0.80 0.20 0.60 0.40 0.40 0.60 0.20 0.80...

7. Stock A has an expected return of 18.6 percent and a beta of 1.2. Stock...

7. Stock A has an expected return of 18.6 percent and a beta of 1.2. Stock B has an expected return of 15 percent and a beta of 0.9. Both stocks are correctly priced and lie on the Security market Line (SML). What is the reward-to-risk ratio for stock A?

A stock price follows geometric Brownian motion with an annual expected return of 6% and a...

A stock price follows geometric Brownian motion with an annual expected return of 6% and a volatility of 35%. The current price is $38. a) What is the probability that a European call option on the stock with an exercise price of $40 and a maturity date in 12 months will be exercised? b) What is the probability that the holder of the European call option on the stock will profit $4.5 upon exercising the option?

Question