2024 – 1 All stocks in an equivalent risk class are priced to offer the same expected rate of return True

1. All stocks in an equivalent-risk class are priced to offer the same expected rate of return.  True/ False?  

2. The Payout Ratio of a company is 40%. What is the company’s Plowback rate?                                 (Do not indicate % in your answer.)        

3.              Company KQR has an Earnings per Share (EPS) of $9.

4.                The Earnings per Share (EPS) of company LMN for 2012 was $ 6.

The Book Value per share of the company was $ 72.

What was the Return on Equity (RoE) for the company?  

Indicate you answer to decimals. Do not include % in your answer.

5.         The Earnings (Net Income) of Company VRZ for the year ended 2012 was $ 10 billion.

6.      The equity capital (par value) of a company EFG is $100 million.

It has accumulated Retained earnings of $700 million.

The company has 20 million shares outstanding.

What is the Book Value per share ($) of the company?        

Do not include $ sign or comma in your answer.

Give your answer to the nearest dollar.           

7. Company Y is expected to pay a dividend of $5 per year forever.

If the market capitalization rate is 5%, what is the current stock price? 

8. Company Z’s Earnings and Dividends per share are expected to grow indefinitely by 5% a year.

Next year’s dividend is expected to be $10.

The market capitalization rate is 8%.

What is the current stock price?    

Indicate your answer to 2 decimals.

9. Current forecasts are for PQR Company to pay Dividends of $2, $2.50, and $3.00 over the next 3 years.

At the end of 3 years you anticipate selling your stock at a market price of $65.00.

What is the price of the stock given a 10% expected return?            

Round your answer to the nearest $.