Exam 8: Valuing Stocks

You would like to buy shares of International Business Machines (IBM).The current bid and ask quotes are $103.25 and $103.30,respectively.You place a market buy-order for 200 shares that executes at these quoted prices.How much money did it cost to buy these shares?

A firm recently paid a $0.30 annual dividend.The dividend is expected to increase by 8 percent in each of the next four years.In the fourth year,the stock price is expected to be $60.If the required rate for this stock is 10 percent,what is its value?

At your discount brokerage firm,it costs $7.95 per stock trade.How much money do you receive after selling 250 shares of General Electric (GE),which trades at $55.19?

If on November 26,2017,The Dow Jones Industrial Average closed at 12,743.40,which was down 237.44 that day.What was the return (in percent)of the stock market that day?

A firm does not pay any dividends at this point in time.Which valuation method should be used on this stock?

As residual claimants,which of these investors claim any cash flows to the firm that remain after the firm pays all other claims?

A stock recently paid a dividend of $2.5 per share.Its growth rate is expected to be 8 percent.Investors require a 10 percent return.The stock is selling in the market for $150.What is this stock worth and is the stock undervalued or overvalued?

Financial analysts forecast ABC Inc.growth for the future to be 12 percent.ABC's recent dividend was $1.60.What is the value of ABC stock when the required return is 15 percent?

A firm is expected to pay a $2.00 dividend per share.The stock is selling in the market place for $50.00 per share.If investors are demanding 10 percent on this stock,what is this stock's growth rate?

A firm recently paid a $1.00 annual dividend.The dividend is expected to increase by 10 percent in each of the next four years.In the fourth year,the stock price is expected to be $100.If the required rate for this stock is 14 percent,what is its value?

Many companies grow very fast at first,but slower future growth can be expected.Such companies are called:

A firm's recent dividend was $2.00 per share.The stock is selling in the market place for $50.00 per share.If investors are demanding 10 percent on this stock,what is this stock's growth rate?

You would like to sell 400 shares of International Business Machines (IBM).The current bid and ask quotes are $96.24 and $96.17,respectively.You place a limit sell-order at $96.20.If the trade executes,how much money do you receive from the buyer?

A firm does not pay a dividend.It is expected to pay its first dividend of $0.10 per share in two years.This dividend will grow at 11 percent indefinitely.Using a 13 percent discount rate,compute the value of this stock.

To list a stock on the NYSE,a company must meet minimum requirements that include all of the following EXCEPT:

Ultra Petroleum (UPL)has earnings per share of $1.75 and P/E of 42.56.What is the stock price?

A firm's recent dividend was $4.00 per share.The stock is selling in the market place for $55.00 per share.If investors are demanding 12 percent on this stock,what is this stock's growth rate?

Home Depot (HD)recently paid a $0.90 dividend.The dividend is expected to grow at a 17 percent rate.At the current stock price of $33.08,what is the return shareholders are expecting?

A stock recently paid a dividend of $3 per share.Its growth rate is expected to be 8 percent.Investors require a 10 percent return.The stock is selling in the market for $140.What is this stock worth and is the stock undervalued or overvalued?

Stock valuation model dynamics make clear that higher growth rates lead to: