Question

In: Finance

GOOG has bet of 1.2 and AAPL has beta of 0.9. The market risk premium is...

GOOG has bet of 1.2 and AAPL has beta of 0.9. The market risk premium is 8% and the risk free rate is 3%. You estimated that GOOG's stock price will growth to $1210 a share next year, from the current level of $1080. You also estimated that AAPL stock price will be $260 next year, where it is $230 currently. GOOG pays no dividend and AAPL will pay $5 in dividend next year. Should you buy/short either of these stocks?

Solutions

Expert Solution

jeff jeffy answered 4 months ago
Next > < Previous

Related Solutions

Stock M has a beta of 1.2. The market risk premium is 7.8 percent and the...
Stock M has a beta of 1.2. The market risk premium is 7.8 percent and the risk-free rate is 3.6 percent. Assume you compile a portfolio equally invested in Stock M, Stock N, and a risk-free security that has a portfolio beta equal to the overall market. What is the expected return on the portfolio? a.) 11.2% b.) 10.8% c.) 10.4% d.) 11.4% e.) 11.7%
Suppose Big Tree Recycling Company has a beta of 1.2. The market risk premium is 8%...
Suppose Big Tree Recycling Company has a beta of 1.2. The market risk premium is 8% and the risk-free rate is 6%. The company’s last dividend was $2/share and this is expected to grow at 8% indefinitely. The stock currently sells for $30/share. What is Big Tree’s cost of equity capital based on the Dividend Pricing Model? A. 15.2% B. 15.4% C. 15.6% D. 14% E. Can't tell since information is missing.
Company ABC’s beta is 1.2. The estimated market risk premium is 8% per annum and the...
Company ABC’s beta is 1.2. The estimated market risk premium is 8% per annum and the risk-free rate is 4% per annum. The company recently paid a dividend per share of $1.00. It is expected that company can maintain a dividend growth of 15% a year for the next 3 years. Given an in-depth analysis, it comes to term that the growth rate will decline to 5% per annum and remains at that level indefinitely. Using multistage dividend discount model...
Company ABC’s beta is 1.2. The estimated market risk premium is 8% per annum and the...
Company ABC’s beta is 1.2. The estimated market risk premium is 8% per annum and the risk-free rate is 4% per annum. The company recently paid a dividend per share of $1.00. It is expected that company can maintain a dividend growth of 15% a year for the next 3 years. Given an in-depth analysis, it comes to term that the growth rate will decline to 5% per annum and remains at that level indefinitely. Using multistage dividend discount model...
1. Full House Co. has the following information: -Beta=1.2, Market Risk Premium= 7%, Risk free rate...
1. Full House Co. has the following information: -Beta=1.2, Market Risk Premium= 7%, Risk free rate = 3% -A current price of common stock of $60/share, with 100,000 shares outstanding -A preferred dividend of $10 with a current price of preferred stock of $100, and 10,000 shares outstanding -5000 outstanding bonds with 20 years to maturity, paying a 5% coupon, and a current price of $1150 and 6000 outstanding bonds with 10 years to maturity, paying a 4%, and a...
A firm has a beta of 1.2. The market return equals 14 percent and the risk-free...
A firm has a beta of 1.2. The market return equals 14 percent and the risk-free rate of return equals 6 percent. What is the estimated cost of common stock equity?
Vanessa Inc has a beta of .7. The market risk premium is 8% and risk-free rate...
Vanessa Inc has a beta of .7. The market risk premium is 8% and risk-free rate is 5%.   Vanessa Inc’s last dividend was $1.20 per share, and the dividend is expected to grow at 7% indefinitely. The stock price is currently $40.   Vanessa Inc’s target capital structure is 30% debt and 70% equity. It cost of debt is 10% before taxes. The tax rate is 40%. a) Calculate the cost of equity under: The dividend growth CAPM Average of the...
A company has unleveraged beta of 1.7, risk free rate 7% and market risk premium for...
A company has unleveraged beta of 1.7, risk free rate 7% and market risk premium for 5%. The applicable tax rate is 40%. The company needs to finance its new project having three different scenarios of financing: Scenario Debt ratio Interest rate (before tax) EPS 1 0% 0% $2.7 2 20% 12% $3.8 3 80% 17% $4.2 2) If the company is unleveraged, its Price per share is * $11.75 $22.41 $17.42 None of the above 3) If the company...
2. A stock has a beta of 1.35, the market risk premium is 6 percent, and...
2. A stock has a beta of 1.35, the market risk premium is 6 percent, and the risk-free rate is 3.5 percent. What is the required rate of return on this stock? Group of answer choices a. 3.50% b. 6.87% c. 11.60% d. 13.13%
Suppose a firm has a beta of 1.5.The market risk premium is expected to be 8%,...
Suppose a firm has a beta of 1.5.The market risk premium is expected to be 8%, and the current risk-free rate is 2%. Suppose a firm has a beta of 1.5.The market risk premium is expected to be 8%, and the current risk-free rate is 2%. The firm maintains a constant growing dividend policy that grows at 5% per year ; the most recent dividend was $1.8. Currently stock price is $21. Multiple Choice To find cost of equity using...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT