question 8 - a. What are the expected returns on Stock J...

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
The following information is available in general and about investments in stocks J and K. The market return (kM) = 9% The risk free rate (kRF) = 5% w Stock J's beta = 0.8 Expected constant growth rate for Stock J = 6% e Investment in Stock J = $80,000 h Stock K's beta = 1.4 Expected constant growth rate for Stock K = 7% e Investment in Stock K = $120,000
Background image of page 1
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: a. What are the expected returns on Stock J and Stock K individually? Expected return on stock j is=8.2% Expected return on stock k is=10.6% b. What is the expected return on the portfolio? Expected return on portfolio is 9.64% c. If Stock K just paid a dividend of $2.50, what is Stock K's intrinsic value? Stock Ks intrinsic value is 74.31...
View Full Document

This note was uploaded on 08/22/2011 for the course ACCOUNTING 201 taught by Professor Stevejoseph during the Winter '11 term at Aarhus Universitet.

Ask a homework question - tutors are online