PROBLEMS_ch8_ch12_solutions

# PROBLEMS_ch8_ch12_solutions - dividend payments at the...

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MGMT 310 Practice problems Relevant material: lectures 11, 12, chapters 8, 12 Chapter 8, problems: 2, 15, 21 (assume throughout that dividends are paid annually) Chapter 12, problems: 14, 16 (for #12.16 -- calculate arithmetic and geometric means) Additional problems: A) Answer the following based on your answers to #8.2 above 1) Suppose you purchase a share of Hot Wings stock today, and you plan to sell the stock in three years right after receiving the annual dividend at time t=3. What is the annualized rate of return you expect on this investment, assuming you can reinvest the interim

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Unformatted text preview: dividend payments at the required rate of return (calculated in #8.2) ? (recall: annualized return = geometric mean) 2) Suppose it is now three years later (time t=3), you just received your third dividend payment (D 3 ), and the price of the stock (P 3 ) is \$50. Suppose expectations regarding future dividend payments remain unchanged. What is the new required rate of return? B) What is the probability that of observing a stock return < -100%?...
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PROBLEMS_ch8_ch12_solutions - dividend payments at the...

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