1. Recife Corporation stock has a Beta of 1.39 and it will pay a dividend of $1.50 next year. The following table shows the various possible economic conditions. State of the economy for the next year__________Probability___________Expected return of t

1. Recife Corporation stock has a Beta of 1.39 and it will pay a dividend of $1.50 next year. The following table shows the various possible economic conditions.

State of the economy for the next year__________Probability___________Expected return of the market

Good_____________________________________40%_______________________15%

Fair______________________________________30%________________________10%

Poor_____________________________________30%_________________________0%

The current riskless rate is 5%. The expected long-term rate of growth of Recife is 8%. Find the value of its common stock. Hint : assume that the predictions of the economy are short-term, perhaps over the next year. Also, assume that the growth of the dividends are long term (perhaps forever).

2. Belem Company stock currently sells at $21 per share. Given the uncertainty in the economy, you have estimated that after one year, the stock price and its dividend will have the following probabilty distribution.

Probability_______________Price/Share_______________Dividend/Share

10%______________________$26______________________$1.20

40%______________________$24______________________$1.10

40%______________________$22______________________$1.00

10%______________________$15______________________$0.90

The expected return of the market is 13% and the risk-free rate is 5%. Estimate the Beta of the stock.

3. Goiania Company has the same growth rate as Campinas Corporation. The current stock price of Goiania is $43 per share, and its dividend this year is $3. The riskless rate is 4% and the expected return on the market is 12%. Campinas stock is selling at $75 per share. Its dividend next year will be $4 a share and its Beta is 1.3. Find the Beta of the Goiania stock.

You can leave a response, or trackback from your own site.

CLICK ORDER NOW TO GET A CUSTOMIZED PAPER ON THIS TOPIC JUST FOR YOU!! 0%PLAGIARISM 100% ORIGINAL PAPER

13 Responses to “1. Recife Corporation stock has a Beta of 1.39 and it will pay a dividend of $1.50 next year. The following table shows the various possible economic conditions. State of the economy for the next year__________Probability___________Expected return of t”

  1. 560565 538086It is a shame you dont have a donate button! Id without a doubt donate to this brilliant weblog! I suppose for now ill settle for book-marking and adding your RSS feed to my Google account. I appear forward to fresh updates and will share this blog with my Facebook group. Chat soon! 283653

  2. 87479 110511This is the fitting weblog for anybody who desires to discover out about this subject. You notice a great deal its nearly onerous to argue with you (not that I truly would wantHaHa). You undoubtedly put a brand new spin on a subject thats been written about for years. Nice stuff, simply fantastic! 931825

  3. Devops says:

    959346 671964This design is steller! You most certainly know how to keep a reader entertained. Between your wit and your videos, I was almost moved to start my own weblog (effectively, almostHaHa!) Fantastic job. I truly loved what you had to say, and much more than that, how you presented it. Too cool! 460160

  4. fake rolex says:

    715215 121390Hosting a weblog composing facility (in a broad sense) requires unlimited space. So I suggest you to discover such internet hosting (internet space provider) that supply flexibility inside your internet space. 61298

  5. 947189 328817Really clean website , thanks for this post. 115252

  6. 354901 590496Hello, Neat post. There is an issue along along with your website in web explorer, could test thisK IE nonetheless is the marketplace leader and a huge portion of other men and women will miss your magnificent writing because of this difficulty. 177234

  7. 410227 424013This was an incredible post. Really loved studying your web site post. Your data was really informative and useful. I feel you will proceed posting and updating regularly. Looking forward to your subsequent one. 803508

  8. 319982 549825Some truly fantastic articles on this website , appreciate it for contribution. 518450

  9. Casino says:

    508597 869424I like this weblog very a lot so considerably excellent information . 417758

  10. 프로툰 says:

    824931 922998Some genuinely good and utilitarian info on this web website , likewise I believe the style and design contains superb features. 252750

  11. Finally, everything is not good, but every day it is very difficult.

  12. 329852 422872Sorry for the huge review, but Im genuinely loving the new Zune, and hope this, as nicely as the outstanding reviews some other folks have written, will aid you decide if it is the correct choice for you. 32791

Leave a Reply

Powered by WordPress | Designed by: buy backlinks | Thanks to webdesign berlin, House Plans and voucher codes