Securities
Not what you're looking for?
** Please see attached file for the problem information **
Use the information on the pages to provide a "fair price" for the securities.
Purchase this Solution
Solution Summary
This solution explains how to use DDM and CAPM to evaluate the given ten stocks and calculate the fair price of this series of publicly traded stocks.
Solution Preview
We use need both the DDM and CAPM to evaluate each of the ten stocks. However, note that ddm is not applicable for some of the stocks. I will point those out when we get there.
First, we need the current interest rate. From Finance.yahoo.com, we can find the current 10 year gov't bond yields 2.997%. For ease of calculation, we say that the current rate, r, is 3%.
Lastly, let me remind you the formulae for ddm and capm.
DDM: p = d/(r-g), where p is price, d is annual dividend, r is interest rate and g is dividend growth rate.
CAPM: Expected return = risk free + beta[expected market return - risk free]
Expected market return is found on pg 2 and is PRICE CHANGE-YTD = 7%.
We begin calculating price of ATT
By CAPM, expected return = 0.03 + 0.24(0.07 - ...
Purchase this Solution
Free BrainMass Quizzes
Business Processes
This quiz is intended to help business students better understand business processes, including those related to manufacturing and marketing. The questions focus on terms used to describe business processes and marketing activities.
Employee Orientation
Test your knowledge of employee orientation with this fun and informative quiz. This quiz is meant for beginner and advanced students as well as professionals already working in the HR field.
Transformational Leadership
This quiz covers the topic of transformational leadership. Specifically, this quiz covers the theories proposed by James MacGregor Burns and Bernard Bass. Students familiar with transformational leadership should easily be able to answer the questions detailed below.
Organizational Behavior (OB)
The organizational behavior (OB) quiz will help you better understand organizational behavior through the lens of managers including workforce diversity.
Cost Concepts: Analyzing Costs in Managerial Accounting
This quiz gives students the opportunity to assess their knowledge of cost concepts used in managerial accounting such as opportunity costs, marginal costs, relevant costs and the benefits and relationships that derive from them.