A share currently worth $100 is expected to pay a constant dividend of $4 for the next 5 years with the first dividend in one year (t=1) and the last in 5 years (t=5).
The total required return is 10% pa.
What do you expected the share price to be in 5 years, just after the dividend at that time has been paid?
Question 526 real and nominal returns and cash flows, inflation, no explanation
How can a nominal cash flow be precisely converted into a real cash flow?
Which one of the below statements about effective rates and annualised percentage rates (APR's) is NOT correct?
Question 667 forward foreign exchange rate, foreign exchange rate, cross currency interest rate parity, no explanation
The Australian cash rate is expected to be 2% pa over the next one year, while the US cash rate is expected to be 0% pa, both given as nominal effective annual rates. The current exchange rate is 0.73 USD per AUD.
What is the implied 1 year USD per AUD forward foreign exchange rate?
A company can invest funds in a five year project at LIBOR plus 50 basis points pa. The five-year swap rate is 4% pa. What fixed rate of interest can the company earn over the next five years by using the swap?
Question 817 expected and historical returns, income and capital returns
Over the last year, a constant-dividend-paying stock's price fell, while it's future expected dividends and profit remained the same. Assume that:
- Now is ##t=0##, last year is ##t=-1## and next year is ##t=1##;
- The dividend is paid at the end of each year, the last dividend was just paid today ##(C_0)## and the next dividend will be paid next year ##(C_1)##;
- Markets are efficient and the dividend discount model is suitable for valuing the stock.
Which of the following statements is NOT correct? The stock's:
A stock, a call, a put and a bond are available to trade. The call and put options' underlying asset is the stock they and have the same strike prices, ##K_T##.
Being long the call and short the stock is equivalent to being: