HWIII - 5. Kim has gathered the following information on a...

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FIN 4504: Investments Homework III (Due Nov. 2 nd , 2010) 1. 2. Gypsum Corp. pays out 25% of its earnings as dividends. Earnings per share are currently $1.32, book value per share is $16.80, and the market price per share is $22.44. What is the dividend yield? 3. Ann purchased stock in a German firm at a price per share of 101.28 euros when the US $/euro exchange rate was $1.023. After six months, Ann sold the stock for 103.40 euros when the US $/euro exchange rate was $0.987. The stock does not pay a dividend. What is Ann's rate of return on this investment? 4. Explain why every stock portfolio should include some defensive stocks.
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Unformatted text preview: 5. Kim has gathered the following information on a company. What is the amount of the earnings per share? 6. The common stock of Jennifer's Furniture Outlet is currently selling at $32.60 a share. The company adheres to a 60% dividend payout ratio and has a P/E ratio of 19. There are 21,000 shares of stock outstanding. What is the amount of the annual net income for the firm? 7. The Medical Equipment Company paid $3.00 common stock dividend last year. The companys policy is to allow its dividend to grow at 5 percent per year indefinitely. What is the value of the stock if the required rate of return is 8 percent?...
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