The return rate of the stock when original value is million. Introduction: Capital pricing model is used when market is not in equilibrium condition. It establishes a relation between return of the stock and risk premium. The return rate depends on the beta value and risk free rate.

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Answer 1

Question

Chapter 11, Problem 19PS

A

Summary Introduction

To calculate: The return rate of the stock when original value is million.

Introduction: Capital pricing model is used when market is not in equilibrium condition. It establishes a relation between return of the stock and risk premium. The return rate depends on the beta value and risk free rate.

B

Summary Introduction

To calculate: The return rate when there is a decrement in the initial capital.

Introduction: When firm gets some addition amount it will increase the return rate. When firm suffers from the loss it will decrease the return value. Return rate measures the gain and loss of the firm compared to the initial value.

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Students have asked these similar questions

The monthly rate of return on T-bills is 1%. The market went up this month by 1.5%. In addition, AmbChaser, Inc., which has an equity beta of 2, surprisingly just won a lawsuit that awards it $1 million immediately.a. If the original value of AmbChaser equity were $100 million, what would you guess was the rate of return of its stock this month?b. What is your answer to (a) if the market had expected AmbChaser to win $2 million?

Yesterday, Michelin paid a dividend of $2.25 (D0). You are considering buy Michelin stock today. Your required rate of return for their equity is 10% (r). You expect that their dividend will grow at 4% per year (g). Assume that dividends are paid annually. According to the Dividend Discount Model, what should be the price per share of Michelin?

Hypothetics Inc. has just paid the annual dividend to shareholders based on $5 earnings per share over the past year. It is a firm policy of Hypothetics to use a plowback ratio of 40%. The company’s return on equity is 15%. You have estimated the risk-adjusted discount rate to be 12%. What is the forward price-earnings ratio ( P1E1P1E1 )? (Round your answer to four decimal places.)

Answer 2

Question

Chapter 11, Problem 19PS

A

Summary Introduction

To calculate: The return rate of the stock when original value is million.

Introduction: Capital pricing model is used when market is not in equilibrium condition. It establishes a relation between return of the stock and risk premium. The return rate depends on the beta value and risk free rate.

B

Summary Introduction

To calculate: The return rate when there is a decrement in the initial capital.

Introduction: When firm gets some addition amount it will increase the return rate. When firm suffers from the loss it will decrease the return value. Return rate measures the gain and loss of the firm compared to the initial value.

Expert Solution & Answer

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Check out a sample textbook solution

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Answer 3

Question

Chapter 11, Problem 19PS

A

Summary Introduction

To calculate: The return rate of the stock when original value is million.

Introduction: Capital pricing model is used when market is not in equilibrium condition. It establishes a relation between return of the stock and risk premium. The return rate depends on the beta value and risk free rate.

B

Summary Introduction

To calculate: The return rate when there is a decrement in the initial capital.

Introduction: When firm gets some addition amount it will increase the return rate. When firm suffers from the loss it will decrease the return value. Return rate measures the gain and loss of the firm compared to the initial value.

Expert Solution & Answer

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Check out a sample textbook solution

See solution

Answer 4

Question

Chapter 11, Problem 19PS

A

Summary Introduction

To calculate: The return rate of the stock when original value is million.

Introduction: Capital pricing model is used when market is not in equilibrium condition. It establishes a relation between return of the stock and risk premium. The return rate depends on the beta value and risk free rate.

B

Summary Introduction

To calculate: The return rate when there is a decrement in the initial capital.

Introduction: When firm gets some addition amount it will increase the return rate. When firm suffers from the loss it will decrease the return value. Return rate measures the gain and loss of the firm compared to the initial value.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 5

Chapter 11, Problem 19PS

A

Summary Introduction

To calculate: The return rate of the stock when original value is million.

Introduction: Capital pricing model is used when market is not in equilibrium condition. It establishes a relation between return of the stock and risk premium. The return rate depends on the beta value and risk free rate.

B

Summary Introduction

To calculate: The return rate when there is a decrement in the initial capital.

Introduction: When firm gets some addition amount it will increase the return rate. When firm suffers from the loss it will decrease the return value. Return rate measures the gain and loss of the firm compared to the initial value.

Answer 6

Chapter 11, Problem 19PS

A

Summary Introduction

To calculate: The return rate of the stock when original value is million.

Introduction: Capital pricing model is used when market is not in equilibrium condition. It establishes a relation between return of the stock and risk premium. The return rate depends on the beta value and risk free rate.

Answer 7

Chapter 11, Problem 19PS

A

Summary Introduction

To calculate: The return rate of the stock when original value is million.

Introduction: Capital pricing model is used when market is not in equilibrium condition. It establishes a relation between return of the stock and risk premium. The return rate depends on the beta value and risk free rate.

Answer 8

B

Summary Introduction

To calculate: The return rate when there is a decrement in the initial capital.

Introduction: When firm gets some addition amount it will increase the return rate. When firm suffers from the loss it will decrease the return value. Return rate measures the gain and loss of the firm compared to the initial value.

Answer 9

B

Summary Introduction

To calculate: The return rate when there is a decrement in the initial capital.

Introduction: When firm gets some addition amount it will increase the return rate. When firm suffers from the loss it will decrease the return value. Return rate measures the gain and loss of the firm compared to the initial value.

Answer 10

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Answer 11

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Answer 12

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Answer 13

Ch. 11 - Prob. 1PS Ch. 11 - Prob. 2PS Ch. 11 - Prob. 3PS Ch. 11 - Prob. 4PS Ch. 11 - Prob. 5PS Ch. 11 - Prob. 6PS Ch. 11 - Prob. 7PS Ch. 11 - Prob. 8PS Ch. 11 - Prob. 9PS Ch. 11 - Prob. 10PS

The return rate of the stock when original value is million. Introduction: Capital pricing model is used when market is not in equilibrium condition. It establishes a relation between return of the stock and risk premium. The return rate depends on the beta value and risk free rate.

Solution Summary: The author explains capital pricing model, which establishes a relation between return of the stock and risk premium.

To calculate: The return rate of the stock when original value is million.

Introduction: Capital pricing model is used when market is not in equilibrium condition. It establishes a relation between return of the stock and risk premium. The return rate depends on the beta value and risk free rate.

Want to see the full answer?

Chapter 11 Solutions

The return rate of the stock when original value is million. Introduction: Capital pricing model is used when market is not in equilibrium condition. It establishes a relation between return of the stock and risk premium. The return rate depends on the beta value and risk free rate.

Solution Summary: The author explains capital pricing model, which establishes a relation between return of the stock and risk premium.

To calculate: The return rate of the stock when original value is million. Introduction: Capital pricing model is used when market is not in equilibrium condition. It establishes a relation between return of the stock and risk premium. The return rate depends on the beta value and risk free rate.

Want to see the full answer?

Chapter 11 Solutions

To calculate: The return rate of the stock when original value is million.

Introduction: Capital pricing model is used when market is not in equilibrium condition. It establishes a relation between return of the stock and risk premium. The return rate depends on the beta value and risk free rate.