JJM has a beta coefficient of 1.2. currently the risk free rate is 2 percent and the anticipated return on the market is 8 percent. JJM pays a $4.50 dividend that is growing at 4 percent annually.
A. what is the required return for JJM?
B. GIVEN THE REQUIRED RETURN, WHAT IS THE VALUE OF THE STOCK?
C. IF THE STOCK IS SELLING FOR $100, WHAT SHOULD YOU DO?
D. IF THE BETA COEFFICIENT DECLINES TO 1.0, E=WHAT IS THE NEW VALUE OF THE STOCK?
E. IF THE PRICE REAMINS $100, WHAT COURSE OF ACTION SHOULD YOU TAKE GIVEN THE VALUATION IN D?
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