question archive 1) Assume that investors believe that Cabañas Paul shares will grow to 5% for only l or forfiveyears, then fall to 2% What would be the price of Cabañas Paul shares if the expected return is 15% and next year's dividend will be $100? 2) Companies A and B showed the following financial statements as of September 3, 2002 and you must calculate the PER for the following distribution rates payout ratio: a) 1%; b) 50% and c) 100%
1) Assume that investors believe that Cabañas Paul shares will grow to 5% for only l or forfiveyears, then fall to 2% What would be the price of Cabañas Paul shares if the expected return is 15% and next year's dividend will be $100? 2) Companies A and B showed the following financial statements as of September 3, 2002 and you must calculate the PER for the following distribution rates payout ratio: a) 1%; b) 50% and c) 100%
Subject:FinancePrice: Bought3
1) Assume that investors believe that Cabañas Paul shares will grow to 5% for only l or forfiveyears, then fall to 2% What would be the price of Cabañas Paul shares if the expected return is 15% and next year's dividend will be $100?
2) Companies A and B showed the following financial statements as of September 3, 2002 and you must calculate the PER for the following distribution rates payout ratio: a) 1%; b) 50% and c) 100%.
A B
Equity 122.200.000 62.700.000
Net income 3.300.000 8.400.000
To 20% 20%
3. Assume that historically rmx 12%, rfx5% and m x 21%. Based on this data
what is the price the market assigns to each unit of risk?
4. An American Treasury bond offers a yield of 5%. A common action has a Beta of 0.70 and an expected yield of 12%.
a) What is the expected return on a portfolio composed of equal investments in these two assets?
b) If a portfolio consisting of these two assets has an expected return of 15%, what is your Beta?
c) If a portfolio consisting of these two assets has a Beta of 1.20, what are the weighting factors? How is the weighting factor interpreted for the risk-free asset?
5. Caracol is considering issuing shares to finance an expansion project. Caracol's financial analysts have determined that the project has the same risk as the market portfolio, with caracol's expected return of 15% and the risk-free rate being 5%. Project performance is estimated at 20%. The project will be carried out unless:
a) The Company Beta is greater than 1.5.
b) The Company Beta is less than 1.5.
c) Whatever the Company Beta because what matters is the Project Beta.
