UNIT 3-FINA310-IP-JMAYS - CAPITALS AND RISKS 1 Unit 3...

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CAPITALS AND RISKS 1 Unit 3 Individual Project FINA310 Jacquelyn Mays American InterContinental University August 7, 2011
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CAPITALS AND RISKS 2 ABSTRACT In this unit we are discussing risks and capitals and I had downloaded the Bloomberg.com: Market Data to get the 10- year risk free rate and then the XYZ Stock Information to get the current stock rate. I had answered the following questions that are in the assignments which we had to compare and give the difference of them.
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CAPITALS AND RISKS 3 US 10-YEAR 3.125 = (risk free rate) Using the information from the XYZ Stock Information document, record the following values XYZ's beta ( ß ) 1.64 XYZ's current annual dividend $.80 XYZ's 3-year dividend growth rate ( g ) 8.02% Industry P/E 23.2 XYZ's EPS $4.87 With the information you recorded, use the CAPM to calculate XYZ's required rate of return ( ks ). CAPM=Ks=Krf + beta (market premium) CAPM= 3.125+ (1.64+7.5%) = 3.125 + 12.3 = 15.425 Use the CGM to find the current stock price for XYZ. We will call this the theoretical price ( Po ).
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