Question
In: Finance
The risk-free rate of return is 9.0%, the expected rate of return on the market portfolio...
The risk-free rate of return is 9.0%, the expected rate of return on the market portfolio is 14%, and the stock of Xyrong Corporation has a beta coefficient of 2.0. Xyrong pays out 50% of its earnings in dividends, and the latest earnings announced were $20 per share. Dividends were just paid and are expected to be paid annually. You expect that Xyrong will earn an ROE of 18% per year on all reinvested earnings forever.
a. What is the intrinsic value of a share of Xyrong stock? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
Intrinsic value $
b-1. If the market price of a share is currently $108, and you expect the market price to be equal to the intrinsic value one year from now, calculate the price of the share after one year from now. (Do not round intermediate calculations. Round your answer to 2 decimal places.)
Price $
b-2. What is your expected one-year holding-period return on Xyrong stock? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
Expected one-year holding-period return %
Solutions
jeff jeffy answered 1 year agoRelated Solutions
The risk-free rate of return is 9.0%, the expected rate of return on the market portfolio...
The risk-free rate of return is 9.0%, the expected rate of
return on the market portfolio is 14%, and the stock of Xyrong
Corporation has a beta coefficient of 2.0 resulting in a required
rate of return of 19.00%. Xyrong pays out 50% of its earnings in
dividends, and the latest earnings announced were $20 per share.
Dividends were just paid and are expected to be paid annually. You
expect that Xyrong will earn an ROE of 18% per year...
The risk-free rate of return is 6%, the expected rate of return on the market portfolio...
The risk-free rate of return is 6%, the expected rate of return
on the market portfolio is 15%, and the stock of Xyrong Corporation
has a beta coefficient of 2.3. Xyrong pays out 45% of its earnings
in dividends, and the latest earnings announced were $9.00 per
share. Dividends were just paid and are expected to be paid
annually. You expect that Xyrong will earn an ROE of 18% per year
on all reinvested earnings forever.
a. What is the...
The risk-free rate of return is 10.0%, the expected rate of return on the market portfolio...
The risk-free rate of return is 10.0%, the expected rate of
return on the market portfolio is 17%, and the stock of Xyrong
Corporation has a beta coefficient of 1.6. Xyrong pays out 30% of
its earnings in dividends, and the latest earnings announced were
$15 per share. Dividends were just paid and are expected to be paid
annually. You expect that Xyrong will earn an ROE of 20% per year
on all reinvested earnings forever.
a. What is the...
The risk-free rate of return is 6%, the expected rate of return on the market portfolio...
The risk-free rate of return is 6%, the expected rate of return
on the market portfolio is 14%, and the stock of Xyrong Corporation
has a beta coefficient of 1.3. Xyrong pays out 50% of its earnings
in dividends, and the latest earnings announced were $8.00 per
share. Dividends were just paid and are expected to be paid
annually. You expect that Xyrong will earn an ROE of 15% per year
on all reinvested earnings forever.
a. What is the...
Given that the risk-free rate is 5% and the expected return on the market portfolio is...
Given that the risk-free rate is 5% and the expected return on the
market portfolio is 10%, if bush company's beta is 2, what is Dow's
expected return?
A. 18%
B. 21%
C. 10%
D. 15%
What is the best measure of risk for an asset that is to be
held in isolation (one stock portfolio)?
A. market risk
B. Beta
C. Diversifiable risk
D. Standard deviation
Which is the best measure of risk for choosing an asset which
is...
The risk-free rate is 8%, the expected return on the market portfolio is 15%, and the...
The risk-free rate is 8%, the expected return on the market
portfolio is 15%, and the stock of Hudson Corp. has a beta of 1.2.
Hudson pays 40% of its earnings as dividends. The earnings next
year are expected to be $12 per share. You expect Hudson to earn an
ROE of 20%.
A. What is the value of Hudson Corp. stock?
B. What is the present value of growth opportunities?
C. What is the P/E ratio of Hudson Corp.?
The risk-free rate is 5%, the expected return on the market portfolio is 14%, and the...
The risk-free rate is 5%, the expected return on the market
portfolio is 14%, and the standard deviation of the return on the
market portfolio is 25%. Consider a portfolio with expected return
of 16% and assume that it is on the efficient frontier. (a) What is
the beta of this portfolio? (b) What is the standard deviation of
its return? (c) What is its correlation with the market return? (d)
Draw the portfolio in two diagrams: one in the...
Given that the risk-free rate is 5%, the expected return on the market portfolio is 20%,...
Given that
the risk-free rate is 5%, the expected return on the market
portfolio is 20%, and the standard deviation of returns to the
market portfolio is 20%, answer the following
questions:
You have $100,000 to invest. How should you allocate your
wealth between the risk free asset and the market portfolio in
order to have a 15% expected return?
What is the standard deviation of your portfolio in (a)?
Now suppose that you want to have a portfolio, which...
The risk free rate of return is 3%, the expected return on themarket portfolio is...
The risk free rate of return is 3%, the expected return on the
market portfolio is 11% and the stock of Xyr Corp has a beta
coefficient of 1.2. Kyr pays out 35% of its earnings in dividends
and the latest earnings announced were $7.50/share. Dividends were
just paid and are expected to be paid annually. You expect that Xyr
will earn an RoE of 19% per year on all reinvested earnings
forever.a. What is the intrinsic value of a...
Suppose the risk-free rate is 5.2 percent and the market portfolio has an expected return of...
Suppose the risk-free rate is 5.2 percent and the market
portfolio has an expected return of 11.9 percent. The market
portfolio has a variance of .0482. Portfolio Z has a correlation
coefficient with the market of .38 and a variance of .3385
According to the capital asset pricing model, what is the
expected return on Portfolio Z? (Do not round intermediate
calculations. Enter your answer as a percent rounded to 2 decimal
places (e.g., 32.16).)
Expected return
????? %
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