Exam 8: Valuing Stocks

JPM has earnings per share of $3.75 and P/E of 47.What is the stock price?

At your discount brokerage firm,it costs $9.95 per stock trade.How much money do you need to buy 100 shares of Ralph Lauren (RL),which trades at $85.13?

Individuals who use their own stock inventory and capital to buy and sell the stocks they represent are called:

Coca-Cola recently paid a $3.00 dividend.Investors expect a 12 percent return on this stock.What is the difference in price if Coca-Cola is expected to grow at 6 percent versus 8 percent?

If a preferred stock from Pfizer Inc.(PFE)pays $3.00 in annual dividends,and the required return on the preferred stock is 7 percent,what's the value of the stock?

Stock valuation model dynamics make clear that lower discount rates lead to:

Suppose that a firm's recent earnings per share and dividends per share are $3.00 and $1.50,respectively.Both are expected to grow at 10 percent.However,the firm's current P/E ratio of 20 seems high for this growth rate.The P/E ratio is expected to fall to 16 within five years.Compute a value for this stock by first estimating the dividends over the next five years and the stock price in five years.Then discount these cash flows using a 14 percent required rate.

At your full-service brokerage firm,it costs $120 per stock trade.How much money do you receive after selling 200 shares of Ralph Lauren (RL),which trades at $85.13?

GEN has 3 million shares outstanding and a P/E ratio of 15.Its earnings per share is $3.00.What is GEN's market capitalization?

A firm is expected to pay a dividend of $2.00 next year and $3.75 the following year.Financial analysts believe the stock will be at their price target of $125.00 in two years.Compute the value of this stock with a required rate of return of 15 percent.

ABC has a net profit margin of 3.3 percent on Sales of $10,000,000.The firm has 50,000 shares outstanding.If the firm's P/E is 19 times,how much is the stock selling for?

A firm recently paid a $0.50 annual dividend.The dividend is expected to increase by 10 percent in each of the next three years.In the third year,the stock price is expected to be $110.If the required return is 15 percent,what is its value?

Coca-Cola recently paid a $3.00 dividend.Investors expect a 12 percent return on this stock.What is the percentage change in price if Coca-Cola is expected to grow at 7 percent versus 8 percent?

If a preferred stock from Ecology and Environment,Inc.(EEI)pays $2.50 in annual dividends,and the required return on the preferred stock is 5.8 percent,what's the value of the stock?

Which of the following is incorrect with respect to limit orders?

A fast growing firm recently paid a dividend of $1.00 per share.The dividend is expected to increase at a rate of 15 percent for the next 3 years.Afterwards,a more stable 6 percent growth rate can be assumed.If a 10 percent discount rate is appropriate for this stock,what is its value?

Annual dividends of Wal-Mart Stores (WMT)grew from $0.23 in 2000 to $0.83 in 2007.What was the annual growth rate?

If Target Corp.(TGT)recently earned a profit of $6.07 earnings per share and has a P/E ratio of 16.5.The dividend has been growing at a 10 percent rate over the past few years.If this growth continues,what would be the stock price in five years if the P/E ratio remained unchanged? What would the price be if the P/E ratio increased to 18 in five years?

Which of these are valued as a special zero-growth case of the constant growth rate model?

Consider a firm that had been priced using a 12 percent growth rate and a 16 percent required return.The firm recently paid a $5.00 dividend.The firm has just announced that because of a new joint venture,it will likely grow at a 12.5 percent rate.How much should the stock price change (in dollars and percentage)?