What you need to know about Required Rate of return

Related BrainMass Solutions

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• Stock, Dividends, and Financial Ratios

  If you want 15% rate of return, how much will you pay for the stock? What is you want a 10% rate of return? What does this tell you about the relationship between the required return and the stock price? 1.

• Foundations of Finance - DDM, Growth rate

  d. dividends of $2.50, $3.50, and $5.00, constant growth at 7% and a required return of 12%? Check the attached sheet. Let me know if you need any further help.

• Stocks, Portfolios, and Expected Return

  Solution consists of an Excel spreadsheet calculating the required rate of return and a portfolio's expected return.

• Expected Stock Price

  Kirkland Motors expects to pay a $2 per share dividend on its common stock at the end of the year (i.e. D1 = $2). The stock currently sells for $20 a share. The required rate of return on the company's stock is 12 percent (i.e. ks = .12).

• Analysis CAPM model, Beta and Expected Return on Shares

  in the form of dividend Here you need to think about what term is changing in the CAPM equation.

• Bond purchase

  In the absence of a financial calculator, I'll show you the formulas in Excel. We need to calculate the rate of return implied by the current price. We buy the bond if the rate of return is greater than our required rate of return.

• Assume that company A has a beta coefficient of 1.2, that the risk free rate is 7.0 % and that the market risk premium is 5 percent. What is the required rate of return on the firm's stock?

  What is the required rate of return on the firm's stock? By CAPM, we know: Rr = Rf + Beta * Risk Premium = 7% + 1.2*5% = 13% 2.

• Cost of Equity for Apple

  Don't worry, you don't actually have to do any calculations - just explain how you would go about doing these calculations and explain what kind of additional information you might need. 5) What do you perceive you have learnt in Module 3 SLP?