Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. finance
  3. stock xyz trades for $63, has current earnings of

Stock XYZ trades for $63, has current earnings of $12, current dividends of $3, and...

80.2K

Verified Solution

Question

Finance

image

Stock XYZ trades for $63, has current earnings of $12, current dividends of $3, and a beta of 1.2. The risk-free rate is 4% and the market risk premium is 5%. a. XYZ's plow-back ratio is b= (answer with 1 decimal, e.g. b=0.3) b. Using the Gordon Growth Model, the growth rate implied by the current valuation of XYZ is g= % (answer an integer, e.g. 3%) c. You believe that the true growth rate is 6%. If by tomorrow all investors come to share your belief and the stock price changes accordingly, the holding period return (HPR) to buying a share of XYZ today and selling it tomorrow (no dividends are due between today and tomorrow) is HPR = % (answer an integer, e.g. 11%)

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students