A $1,000 corporate bond with 20 years to maturity pays a coupon of 7% (semi-annual) and the market required rate of return is a) 6.6% b) 13%. What is the current selling price for a) and b)?
+118723 Charlie Company is expected to grow at an annual rate of 6% indefinitely. The return on similar stocks is currently 11%. Charlie's board of directors declared a dividend of $1.85 yesterday. What should a share of Charlie Company sell for?
This one I am totally guessing BUT
if the return is 11% and the growth is 6% then the dividend must be 11-6=5%
You question does not say how often the dividend is paid but I will assume it is yearly.
5%X=1.85
X=1.85 / 0.05
X= $37
that might be the answer LOL
Charlie Company is expected to grow at an annual rate of 6% indefinitely. The return on similar stocks is currently 11%. Charlie's board of directors declared a dividend of $1.85 yesterday. What should a share of Charlie Company sell for?
+118723 A $1,000 corporate bond with 20 years to maturity pays a coupon of 7% (semi-annual) and the market required rate of return is a) 6.6% b) 13%. What is the current selling price for a) and b)?
I just answered one almost identical to this so you can copy the technique of that one. :)
+118723 Charlie Company is expected to grow at an annual rate of 6% indefinitely. The return on similar stocks is currently 11%. Charlie's board of directors declared a dividend of $1.85 yesterday. What should a share of Charlie Company sell for?
This one I am totally guessing BUT
if the return is 11% and the growth is 6% then the dividend must be 11-6=5%
You question does not say how often the dividend is paid but I will assume it is yearly.
5%X=1.85
X=1.85 / 0.05
X= $37
that might be the answer LOL
