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MODULE 6 - RECORDED

# MODULE 6 - RECORDED - View Attempt...

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View Attempt 1 of 2 Title: 06 Recorded Stocks Started: April 18, 2010 12:13 AM Submitted: April 18, 2010 12:34 AM Time spent: 00:20:29 Total score: 100/110 = 90.9091% Total score adjusted by 0.0 Maximum possible score: 110 Done 1-7 DCF model 1. To determine whether or not to invest in a stock, you must compare intrinsic value (IV) with market price (P). (Alternatively, you can compare expected return with required return.) Refer to the table below to relate the term in column 1 with its correct decision from the drop-down choices. Relationship Decision P > IV A P < IV B P = IV C Statement Response Value Correct Match Buy (stock is underpriced) B 33.33% B Don't buy (stock is overpriced) A 33.33% A Equilibrium C 33.34% C Score: 5/5 2. Refer to the figure below to determine which is the resistance and which the support line. Your location: Assessments View All Submissions › View Attempt View Attempt https://ecampus.unt.edu/webct/urw/lc3868415321231.tp3868415343231/. .. 1 of 10 4/18/2010 12:44 am

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Statement Response Value Correct Match Resistance line A 50.0% A Support line B 50.0% B Score: 5/5 3. Sharon Branscome is considering buying the common stock of Altria Group. Ms. Branscome requires a nominal 24 percent per year rate of return on investment in stocks like Altria with a beta of 1.05. She expects the stock price to be \$97.88 at the end of her investment (holding) period in 1½ years. How much is the present value (at time t=0) of the expected sale price of the common stock? Nearest Student Response Value Correct Answer A. \$66.67 B. \$69 100% C. \$67.10 D. \$76.68 E. \$32.10 Score: 5/5 4. Frances Sullivan considers buying common stock of American Airco. The stock trades actively on a regional exchange. She expects dividends per share at the end of each of the next three quarters to decline and be those amounts below. End of quarter Amount 1 \$ 3.15 2 \$ 2.99 3 \$ 2.84 Ms. Sullivan expects the price of the stock at the end of three quarters (nine months) to be \$38.125. She requires a nominal 15 percent rate of return on investments with risk equivalent to that of American Air. The stock now trades for \$41. How much is intrinsic value? Nearest Student Response Value Correct Answer A. \$52.17 B. \$108.22 View Attempt https://ecampus.unt.edu/webct/urw/lc3868415321231.tp3868415343231/. .. 2 of 10 4/18/2010 12:44 am
Student Response Value Correct Answer C. \$66.67 D. \$58.48 E. \$42.50 100% Score: 5/5 5. Sharon Branscome is considering buying the common stock of Altria Group (previously named Philip Morris). Ms. Branscome requires a nominal 24 percent per year rate of return on investment in stocks with Altria's beta of 1.05. She expects the stock price to be \$97.88 at the end of her investment (holding) period in 1½ years. The most recent quarterly dividend (at time t=0) was 52½¢. The expected growth rate is a nominal

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MODULE 6 - RECORDED - View Attempt...

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