Reading 60: An Introduction to Security Valuation: Part II

答案和详解如下：

16.Assume that a stock paid a dividend of $1.50 last year. Next year, an investor believes that the dividend will be 20 percent higher and that the stock will be selling for $50 at year-end. Assume a beta of 2.0, a risk-free rate of 6%, and an expected market return of 15%. What is the value of the stock?

A)   $40.32.

B)   $41.77.

C)   $45.00.

D)   $51.50.

The correct answer was B)

Using the Capital Asset Pricing Model, we can determine the discount rate equal to 0.06 + 2(0.15 – 0.06) =0.24. The dividends next year are expected to be $1.5 x 1.2 = $1.8. The present value of the future stock price and the future dividend are determined by discounting the expected cash flows at the discount rate of 24%: (50 + 1.8)/1.24 = $41.77.

17.An investor is considering acquiring a common stock that he would like to hold for one year. He expects to receive both $1.50 in dividends and $26 from the sale of the stock at the end of the year. What is the maximum price he should pay for the stock today to earn a 15 percent return?

A)   $27.30.

B)   $24.11.

C)   $23.91.

D)   $27.50.

The correct answer was C)

By discounting the cash flows for one period at the required return of 15% we get: x = (26 + 1.50) / (1+.15)¹

(x)(1.15) = 26 + 1.50

x = 27.50 / 1.15

x = $23.91

18.Use the following information on Brown Partners, Inc. to compute the current stock price.

 Dividend just paid = $6.10

 Expected dividend growth rate = 4%

 Expected stock price in one year = $60

 Risk-free rate = 3%

 Equity risk premium = 12%

A)   $59.55.

B)   $57.48.

C)   $59.77.

D)   $57.70.

The correct answer was D)

The current stock price is equal to (D₁ + P₁) / (1 + k_e). D₁ equals $6.10(1.04) = $6.34. The equity discount rate is 3% + 12% = 15%. Therefore the current stock price is ($6.34 + $60)/(1.15) = $57.70

19.A stock is expected to pay a dividend of $1.50 at the end of each of the next three years. At the end of three years the stock price is expected to be $25. The equity discount rate is 16 percent. What is the current stock price?

A)   $17.18.

B)   $19.39.

C)   $24.92.

D)   $18.90.

The correct answer was B)

The value of the stock today is the present value of the dividends and the expected stock price, discounted at the equity discount rate:
$1.50/1.16 + $1.50/1.16² + $1.50/1.16³ + $25.00/1.16³ = $19.39

20.Which of the following statements about the constant growth dividend discount model (DDM) is FALSE?

A)   In the constant growth DDM dividends are assumed to grow at a constant rate forever.

B)   The constant growth DDM is used primarily for stable mature stocks.

C)   In the constant growth DDM the firm is expected to pay dividends.

D)   For the constant growth DDM to work, the growth rate must exceed the required return on equity.

The correct answer was D)

Dividends grow at constant rate forever.

Stock must pay dividends.

Constant growth DDM is used for mature firms.

k must be greater than g.