Home assignment

Date: 2015-10-07; view: 453.

1) Blackburn & Smith's common stock currently sells for $23 per share. The company's executives anticipate a constant growth rate of 10.5 percent and an end-of-year dividend of $2.50.If you require a 17 percent return, should you purchase the stock?

2.5+P1/(1+0.17)=2.5
P1=(23*1.17)-2.5=24.41

2) Analysts are projecting that Kcell will have earnings per share of 150 KZT. If the average industry PE ratio is about 25, what is the current price of Kcell?

Current price=150*25=3 750

3) Find the price for a stock given that the next dividend is $1.23 per share, the required return is 12.9%, and the growth rate in dividends is 8.3% per year.

P0=1.23/(0.129-0.083)=1.23/0.046=26.739

4) Find the price for a stock given that the current dividend is $4.94 per share, the required return is 9.7%, and the growth rate in dividends is 6.1% per year.

P0=4.94*(1+0.061)/(0.097-0.061)=5.24134/0.036=145.59

5) Find the required return on a stock given that the next dividend is $2.81 per share, the growth rate in dividends is 8.91%, and the stock price is $41.38 per share.

41.38=2.81/x-0.0891
41.38(x-0.0891)=2.81

41.38x-3.686958=2.81

41.38x=6.496958

X=0.157=15.7%

6) Given the book on Intel stock what would be the average price per share on a 125,000 market sell order? After the order is completed what would be the last market price?

6) Describe the settlement process if you invest in foreign markets.

If a am going to buy foreign markets all my operations will carry out with helping banks,not through sentral depositarium..because central depositarium can not carry out this process in foreign country,only in our country. When I want to buy stocks in forein country I will go to my bank and tell them about my plan,then calculation will in custodian of this bank. After that they will send my order to BONY…Global custody..there calculate again and settle sdelka..T+3 usually…

7) What is the difference between Private placement and Public offering?

Public offering it is when everybody can buy your securities, every investor.

Private placement where will be only a few people who knows about this securities hence special investors with whom have already had agreement.

9) What are the main drawbacks of stock valuation methods discussed on lecture?

The main of them it is problems with Estimating Growth, with Estimating Risk and with Forecasting Dividends. Because , it can be really difficult to determine them. We can make mistake…we can take lots of risk and lose our money. Or wrong estimate growth and dividends.

10) Describe the process of forming ADR/GDR. What is the difference between them (ADR&GDR)?

ADR/GDR when you send your securities to the bank ADR/GDR and want so that their will be traded in stock exchange. They are traded in SE even though does not appropriate to their requirements. American only in American SE..Global all SE except American