#1 ° The risk-free rate is 2.57% and the market risk premium is 7.38%. A stock with a ẞ of 1.63 just paid a dividend of $2.33. The dividend is expected to grow at 24.51% for three years and then grow at 4.91% forever. What is the value of the stock? Submit Answer format: Currency: Round to: 2 decimal places. The risk-free rate is 3.28% and the market risk premium is 9.39%. A stock with a ẞ of 1.35 just paid a dividend of $1.76. The dividend is expected to grow at 21.95% for five years and then grow at 4.93% forever. What is the value of the stock? Submit

#1 ° The risk-free rate is 2.57% and the market risk premium is 7.38%. A stock with a ẞ of 1.63 just paid a dividend of $2.33. The dividend is expected to grow at 24.51% for three years and then grow at 4.91% forever. What is the value of the stock? Submit Answer format: Currency: Round to: 2 decimal places. The risk-free rate is 3.28% and the market risk premium is 9.39%. A stock with a ẞ of 1.35 just paid a dividend of $1.76. The dividend is expected to grow at 21.95% for five years and then grow at 4.93% forever. What is the value of the stock? Submit

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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uestion Consider three securities that will pay risk-free cash flows over the next three years and that have the current market prices shown here: This question: 10p Security Price Today ($) Cash Flow in Cash Flow in Cash Flow in Two Years ($) Three Years ($) Name One Year ($) B1 $92.42 100 B2 $84.32 100 B3 $382.92 500 Calculate the no-arbitrage price, or the price that eliminates any arbitrage opportunities, of a new security, B4, that pays risk-free cash flows of $500 in one year and $1,000 in three years. The current no-arbitrage price of Security B4 is: (round your answer to two decimal places) O Time tv 9 MacBook Air DD DII F10 F9 F8 888 F7 80 F6 F5 F4 F3 esc F2 F1 & * OC
Q2 (Exercise 5.8) The S&R index spot price is 1100, the continuously compounded risk-free rate is 5%, and the continuous dividend yield on the index is 2%. a. Suppose you observe a 6-month forward price of 1120. What arbitrage would you undertake? b. Suppose you observe a 6-month forward price of 1110. What arbitrage would you undertake?
What is the price of an American CALL option that is expected to pay a dividend of $2 in three months with the following parameters? s0 = $40d = $2 in 3 monthsk = $43 r = 10%sigma = 20%T = 0.5 years (required precision 0.01 +/- 0.01)
In two-months the price of stock will be either $23 or $27. The risk-free interest rate is 10%. The current price of the stock is $25. Suppose the price of the stock will be ST at the end of the two-months and the derivative on the stock will pays off St². Find the value of the derivative. (A) $621.39 (B) $729.39 (C) $529.39 (D) $639.26
Consider a non-dividend paying stock that is currently trading at Rs.540. You entered into a short forward contract some time back at a strike price of Rs.595. The continuously compounded risk-free rate is 8% per annum and currently it has 9 months to maturity. The current forward price should be __________and value of the forward contract is_______. Rounded off to three decimal places.
Please answer both questions What is the risk premium for the stock in the table below? The risk free rate is 1.05% and the market risk premium is 5.41%. What is the expected return based on CAPM for the stock in the table below? The risk free rate is 1.05% and the market risk premium is 5.41%. The Home Depot, Inc. (HD) NYSE - NYSE Delayed Price. Currency in USD 264.55 -0.26 (-0.10%) At close: December 11 4:00PM EST summary Company Outlook Chart Conversations Stal Previous Close 264.81 Market Cap 284.815B Open 263.36 Beta (5Y Monthly) 1.05 Bid 264.15 x 1000 PE Ratio (TTM) 22.88 Ask 264.55 x 800 EPS (TTM) 11.56 Day's Range 262.65 - 265.36 Eamings Date Feb 23, 2021 52 Week Range 140.63 - 292.95 Forward Dividend & Yield 6.00 (2.27%) Volume 3,454,512 Ex-Dividend Date Dec 02, 2020 Arg. Volume 3,631,762 ly Target Est 305.06
A stock trades at $100 today. In a year it will either be $120 or $30. What is the price of a $90 - strike put today if the risk-free rate is 10% ? Group of answer choices a. 6.06 b. 0.00 c. 60.60 d. 13.33
A stock trades at $100 today. In a year it will either be $120 or $30. What is the price of a $90-strike put today if the risk-free rate is 10%? Group of answer choices a. 6.06 b. 0.00 c. 60.60 d. 13.33
Suppose a stock price can go up by 15.25% or down by 13.25% over the next year. You own a one-year put on the stock. The interest rate is 11%, and the current stock price is $61. a. What exercise price leaves you indifferent between holding the put or exercising it now? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Break-even exercise price 0.85 b. How does this break-even exercise price change if the interest rate is increased? If the interest rate is increased, the value of the put option decreases %24
D6 AMXL price is at 16.20, AMXL is expected to pay a dividend of 16 cents in 30 days and pay a dividend of 16 cents in 60 days. The 30-day risk-free rate is 8% and the 60-day risk-free rate is 8.60%. Do the following operations.a) Calculate the price of the 45-day forward
A European call that will expire in one year is currently trading for $3. Assume the risk-free rate (based on continuous compounding) is 5%, the underlying stock price is $60 and the strike price is $55. a. Is there an arbitrage opportunity? b. Describe exactly what a trader should do to take advantage of the arbitrage opportunity assuming it exists. c. Determine the present value of the profit that the trader can earn assuming you identify an arbitrage opportunity. Use at least four decimal places for those questions that require a numerical answer.
In two-months the price of stock will be either $23 or $27. The risk-free interest rate is 10%. The current price of the stock is $25. Suppose the price of the stock will be ST at the end of the two-months and the derivative on the stock will pays off Sr?. Find the value of the derivative. (A) $621.39 (B) $729.39 (C) $529.39 (D) $639.26

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