Reading 60: An Introduction to Security Valuation: Part II

答案和详解如下：

36.A company has just paid a $2.00 dividend per share and dividends are expected to grow at a rate of 6% indefinitely. If the required return is 13%, what is the value of the stock today?

A)   $32.25.

B)   $34.16.

C)   $30.29.

D)   $35.11.

The correct answer was C)

P₀ = D₁ / (k - g) = 2.12 / (0.13 - 0.06) = $30.29

37.Using an infinite period dividend discount model, find the value of a stock that last paid a dividend of $1.50. Dividends are expected to grow at 6 percent forever, the expected return on the market is 12 percent and the stock’s beta is 0.8. The risk-free rate of return is 5 percent.

A)   $34.57.

B)   $32.61.

C)   $26.50.

D)   $25.00.

The correct answer was A)

First find the required rate of return using the CAPM equation.

k = 0.05 + 0.8(0.12 - 0.05) = 10.6%

$1.50(1.06) /(0.106 - 0.06) = $34.57

38.Using the one-year holding period and multiple-year holding period dividend discount model (DDM), calculate the change in value of the stock of Monster Burger Place under the following scenarios. First, assume that an investor holds the stock for only one year. Second, assume that the investor intends to hold the stock for two years. Information on the stock is as follows:

 Last year’s dividend was $2.50 per share.

 Dividends are projected to grow at a rate of 10.0% for each of the next two years.

 Estimated stock price at the end of year 1 is $25 and at the end of year 2 is $30.

 Nominal risk-free rate is 4.5%.

 The required market return is 10.0%.

 Beta is estimated at 1.0.

The value of the stock if held for one year and the value if held for two years are:

       Year one    Year two

A)              $25.22        $35.25

B)              $27.50        $35.25

C)              $27.50        $29.80

D)              $25.22        $29.80

The correct answer was D)

First, we need to calculate the required rate of return. When a stock’s beta equals 1, the required return is equal to the market return, or 10.0%. Thus, k_e = 0.10. Alternative:  Using the capital asset pricing model (CAPM), k_e = R_f + Beta * (R_m – R_f) = 4.5% + 1 * (10.0% - 4.5%) = 4.5% + 5.5% = 10.0%.

Next, we need to calculate the dividends for years 1 and 2.

  D₁ = D₀ * (1 + g)   = 2.50 * (1.10) = 2.75

  D₂ = D₁ * (1 + g)   = 2.75 * (1.10) = 3.03

Then, we use the one-year holding period DDM to calculate the present value of the expected stock cash flows (assuming the one-year hold).

  ₀ = [D₁/ (1 + k_e)] + [P₁ / (1 + k_e)] = [$2.75 / (1.10)] + [$25.0 / (1.10)] = $25.22. Shortcut: since the growth rate in dividends, g, was equal to k_e, the present value of next year’s dividend is equal to last year’s dividend.

Finally, we use the multi-period DDM to calculate the return for the stock if held for two years.

  P₀ = [D₁/ (1 + k_e)] + [D₂/ (1 + k_e)²] + [P₂ / (1 + k_e)²] = [$2.75 / (1.10)] + [$3.03 / (1.10)²] + [$30.0 / (1.10)²] = $29.80. Note: since the growth rate in dividends, g, was equal to k_e, the present value of next year’s dividend is equal to last year’s dividend (for periods 1 and 2). Thus, a quick calculation would be 2.5 * 2 + $30.00 / (1.10)²  = 29.80.

39.A company last paid a $1.00 dividend, the current market price of the stock is $20 per share and the dividends are expected to grow at 5 percent forever. What is the required rate of return on the stock?

A)   10.00%.

B)   10.25%.

C)   9.78%.

D)   11.16%.

The correct answer was B)

D₀ (1 + g) / P₀ + g = k

1.00 (1.05) / 20 + 0.05 = 10.25%.

40.Calculate the value of a common stock that last paid a $2.00 dividend if the required rate of return on the stock is 14 percent and the expected growth rate of dividends and earnings is 6 percent.  What growth model is an example of this calculation?

       Value of stock    Growth model

A)                      $26.50       Gordon growth

B)                      $25.00       Gordon growth

C)                      $25.00       Supernormal growth

D)                      $26.50       Supernormal growth

The correct answer was A)

$2(1.06)/0.14 - 0.06 = $26.50.

This calculation is an example of the Gordon Growth Model also known as the constant growth model.