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Unformatted text preview: rate is constant and equals 1,25%. What is the expected present value of future profits? 7. Stock promises a dividend of 5.000$ after a year and 6.000$ after two years. Interest rate is constant and equals to 4%. Calculate the current price of stock! 8. Stock promises a dividend of 1.500$ after a year and 3.000$ after two years. Interest rate is constant and equals to 7%. Calculate the current price of stock! 9. Real interest rate is 3%. Expected price level at the end of next year is 15% higher than current price level. What is the discount factor? 10. Real interest rate is 2%. Expected price level at the end of next year is 5% higher than current price level. What is the discount factor? i t i t+1 i t+2 i t+3 Case 1 5% 8% Case 2 10% 0% 5% 0% Case 3 0% 0% 7% 6%...
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This note was uploaded on 10/20/2011 for the course DD 3 taught by Professor Batman during the Spring '11 term at Yale.
 Spring '11
 Batman

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