Is the betting market at roulette an efficient market?
Answer to relevant QuestionsA firm has just paid (the moment before valuation) a dividend of 55¢ and is expected to exhibit a growth rate of 10% into the indefinite future. If the appropriate discount rate is 14%, what is the value of the stock? Assume that the forecast for the company in Problem 5 was such that at the end of the fifth year its growth was to decline linearly for four years to reach the steady state 6% growth rate. Assume that the payout ratio was ...If expectations determine share price, what is a valuable analyst? Given the following bonds: Bond ... Duration (years) A ...... 5 B...... 10 C...... 12 Construct three different portfolios of the three bonds, each with a duration of nine years. Assume that General Mills, a user of wheat, and wheat farmers have the same distributional assumptions about future wheat prices. Does a futures contract make economic sense from both points of view? If yes, why?
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