Explain why low interest rates make housing stocks and other related stocks attractive.
Answer to relevant QuestionsWhy might a firm begin paying stock dividends in the growth stage? As a follow-up to question 8, give two examples of powerful suppliers. Based on the sustainable growth model, if a firm increases the dividend payout ratio (1 – the retention ratio), will this increase or decrease the growth in earnings per share in the future? J. Jones investment bankers will use a combined earnings and dividend model to determine the value of the Allen Corporation. The approach they take is basically the same as that in Table 7–2 on page 172 in the chapter. ...If in problem 2 the beta (b) were 1.9 and the other values remained the same, what is the new value of Ke? What is the relationship between a higher beta and the required rate of return (Ke)?
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