Homework 5

Homework 5 - Emilie Gein Homework 5 General Electric Stock...

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Unformatted text preview: Emilie Gein Homework 5 General Electric Stock Return 7-Mar-08 32.23 0.01954 7 6-Mar-08 32.86 0.02465 5-Mar-08 33.67- 0.00446 4-Mar-08 33.52- 0.00358 3-Mar-08 33.4- 0.00778 29-Feb- 08 33.14 0.02142 4 28-Feb- 08 33.85 0.00502 2 27-Feb- 08 34.02- 0.00235 26-Feb- 08 33.94 0.00795 5 25-Feb- 08 34.21- 0.01929 22-Feb- 08 33.55 0.00417 3 21-Feb- 08 33.69 0.01988 7 20-Feb- 08 34.36- 0.00233 19-Feb- 08 34.28 0.00262 5 12. g=.15x.4= .06 Po= Div/ (r-g) Po= 2.4/ (x- .06)=40 so the discount rate = 12% 15. A) \$27= \$1.64/ (X-.03) X=9.074% B) \$27= \$1.64/(.1-X) X= 3.926% C) \$27= \$1.64/(X- (.05x.4)) X=8.074% 17. A) X= \$3/.15 X=\$20/share B) X= \$3/(.15+.10) X=\$12/share C) (3+ 12 -20) / 20= -25% D) You can distinguish between a bad stock and a bad company. The industry may be declining but the stock might still be a good investment. 22. A) \$2.40/(.12-.04)= X X=\$30/share B) \$30/\$3.1= 9.67742 P/E Ratio means high value growth opportunities 24. A) \$4/.1 Stock Price= \$40 P/E Ratio= 10Growth rate= .10x0= 0 B) \$4/(.1-.1x.4)B) \$4/(....
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This note was uploaded on 03/30/2008 for the course FINA 3001 taught by Professor Someguy during the Spring '08 term at Minnesota.

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Homework 5 - Emilie Gein Homework 5 General Electric Stock...

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