Warren Buffett expects a 6% return on Goldman Sach’s preferred stock, and the dividend is expected...

Warren Buffett expects a 6% return on Goldman Sach’s preferred stock, and the dividend is expected to be $1.30 every six months, what is the fair price for this preferred stock per share?

A) $43.333

B) $21.667

C) $86.667

D) $ 1.245

None of the above

Expert Solution

Fair price = Annual dividend / Return

Fair price = ($1.30 * 2) / 0.06

Fair price = $43.333

jeff jeffy answered 2 years ago

Preferred stock has a dividend of $12 per year. The required return is 6%. What should...

Preferred stock has a dividend of $12 per year. The required return is 6%. What should be the price per share? Hurricane Corporation expects to grow its dividend by 5% per year. The current dividend is $2 per share. The required return is 8%. What is the estimated value of a share of common stock? If the price is $40 and dividends were $1.50 per share but expected to grow at 4% per year, what would be the required rate...

A stock advisor claims that Berkshire Hathaway, the investment co. run by Warren Buffett, generates ‘positive...

A stock advisor claims that Berkshire Hathaway, the investment co. run by Warren Buffett, generates ‘positive alpha.’ How can we test this using a regression model? What are we looking for in the regression output? Write out the regression and state what we are looking for.

The expected return on Natter Corporation’s stock is 18%. The stock’s dividend is expected to grow...

The expected return on Natter Corporation’s stock is 18%. The stock’s dividend is expected to grow at a constant rate of 14%, and it currently sells for $50 a share. Which of the following statements is CORRECT? a. The stock price is expected to be $57 a share one year from now. b. The current dividend per share is $4.00. c.The stock’s dividend yield is 8%. d.The stock’s dividend yield is 7%. e.The stock price is expected to be $54...

The expected total return on a share of stock minus the total expected dividend yield equals...

The expected total return on a share of stock minus the total expected dividend yield equals the total expected capital gains yield. True or False

What is the expected return of a stock given stock price and dividend information? (show formula)...

What is the expected return of a stock given stock price and dividend information? (show formula) What is dividend yield and capital gain yield of stock investment? (show formula)

Apfel preferred stock offers a dividend of $1.77 per share. If you demand a return of...

Apfel preferred stock offers a dividend of $1.77 per share. If you demand a return of 8% on your investment, what will you be willing to pay per share? (Enter the number only with 2 decimal places. Do not enter $ or % or any other symbol.)

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?

(Preferred stockholder expected return )You are considering the purchase of Kline, Inc. stock at a market...

(Preferred stockholder expected return )You are considering the purchase of Kline, Inc. stock at a market price of $40.88 per share. Assume the stock pays an annual dividend of $2.34. What would be your expected return? Should you purchase the stock if your required return is 44 percent? answer in excel if possible

Consider the following three stocks: Stock A is expected to provide a dividend of $6 a...

Consider the following three stocks: Stock A is expected to provide a dividend of $6 a share forever. Stock B is expected to pay a dividend of $3.5 next year. Thereafter, dividend growth is expected to be 3% a year forever. Stock C is expected to pay $1.25, $3.80, and $3.00 over the next three years, respectively. Starting in year 4 and thereafter, dividend growth is expected to be 3.5% a year forever. If the discount rate for each stock...

If 1) the expected return for Litchfield Design stock is 19.65 percent; 2) the dividend is...

If 1) the expected return for Litchfield Design stock is 19.65 percent; 2) the dividend is expected to be 2.34 dollars in 2 year(s), 5.7 dollars in 4 years, and 9.33 dollars in 7 years; and 3) after the dividend is paid in 7 years, the dividend is expected to grow by 2.44 percent per year forever, then what is the current price of the stock? If no expected dividend is mentioned for a given year, assume the expected dividend is...

Question