1. If each stock in the DJIA goes up by $.50 per share, what is the...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
1. If each stock in the DJIA goes up by $.50 per share, what is the point change in the DJIA if the divisor is .23156? 2. If each stock in the DJIA goes up by exactly 1%, what is the percentage change in the DJIA? 3. Why do stocks with high prices have more impact on the DJIA? 4. If all stocks in the S&P 500 go up by $.50 per share, what is the point change in the S&P? 5. If all stocks in the S&P 500 go up by 1%, what is the percentage change in the S&P 500? 6. Why don't stocks with higher prices have more impact on the S&P 500? 7. What are the comparative advantages and disadvantages between the DJIA and the S&P 500? 8. In the Gordon dividend growth model, if P/E equals 20, r=12%, the dividend payout ratio is .5, what is the implied growth rate of the market. 9. When valuing a stock using the Gordon Growth model, the model breaks down using the parameters above if g exceeds what value? 10. Why is a multi-stage dividend growth model so sensitive to the growth rate in the terminal period? 1. If each stock in the DJIA goes up by $.50 per share, what is the point change in the DJIA if the divisor is .23156? 2. If each stock in the DJIA goes up by exactly 1%, what is the percentage change in the DJIA? 3. Why do stocks with high prices have more impact on the DJIA? 4. If all stocks in the S&P 500 go up by $.50 per share, what is the point change in the S&P? 5. If all stocks in the S&P 500 go up by 1%, what is the percentage change in the S&P 500? 6. Why don't stocks with higher prices have more impact on the S&P 500? 7. What are the comparative advantages and disadvantages between the DJIA and the S&P 500? 8. In the Gordon dividend growth model, if P/E equals 20, r=12%, the dividend payout ratio is .5, what is the implied growth rate of the market. 9. When valuing a stock using the Gordon Growth model, the model breaks down using the parameters above if g exceeds what value? 10. Why is a multi-stage dividend growth model so sensitive to the growth rate in the terminal period?
Expert Answer:
Answer rating: 100% (QA)
The DJIA is a priceweighted index so the point change is calculated by multiplying the price change of each stock by its weighting in the index the divisor is used to scale the index level If each sto... View the full answer
Related Book For
Fundamentals of Investing
ISBN: 978-0133075359
12th edition
Authors: Scott B. Smart, Lawrence J. Gitman, Michael D. Joehnk
Posted Date:
Students also viewed these accounting questions
-
A startup has a demand that goes up by 50 percent each year. This demand increase is multiplicative. True or false? a. True b. False
-
Payout Ratio and Book Value per Share Divac Company has developed a statement of stockholders equity for the year 2010 as follows: Divacs preferred stock is $100 par, 8% stock. If the stock is...
-
The dividend payout ratio equals dividends paid divided by earnings. How would you expect this ratio to behave during a recession? What about during an economic boom?
-
How can staff review the effectiveness of their work, the services they provide and the social and cultural factors impacting on clients, groups or communities?
-
What is the net present value of a firms investment in a U.S. Treasury security yielding 5 percent and maturing in one year?
-
Selected financial data for Tim Hortons and Starbucks are presented below for a recent year. Instructions (a) For each company, calculate the following ratios: 1. Current ratio 2. Receivables...
-
How can distributable profits become non-distributable?
-
1. How do the concepts of roles and norms figure into this case? Explain. 2. What are the implications for mixed-gender work groups? Is this a good way to combat sexual harassment? Explain. 3. Does...
-
Company A is a global company based in the United States that operates in the financial industry. Company A serves its customers. with financial products, such as checking accounts, bank cards, and...
-
1. What type of attitude scale is used by the ACSI if any? 2. What type of attitude study might you design if you were the consultant? 3. How would you use results from this approach to diagnose...
-
S18-4 Calculating EUP Learning Objective 2 Cadwell manufactures cell phones. The conversion costs to produce cell phones for November are added evenly throughout the process in the Assembly...
-
March 1 March 5 March 9 Activities Beginning inventory Purchase Warnerwoods Company uses a periodic inventory system. It entered into the following purchases and sales transactions for March. Date...
-
Baillie Power leased high-tech electronic equipment from Courtney Leasing on January 1, 2024. Courtney purchased the equipment from Doane Machines at a cost of $251,500, its fair value. Note: Use...
-
How does Harsha Walia define "border imperialism" and how does her analyzation of border imperialism in the essay/article "Not a Border Crisis: Harsha Walia on Why It's Time for a New Political...
-
You are trying to measure the width of a sidewalk, but you measure the distances from the street to each side of the sidewalk. If you measure the far side of the sidewalk to be 24.30.05 m from the...
-
In the program below, of the two lines of code with a comment, which one is not allowed (i.e., would result in an error)? int main() { int *ptr; int a[2], b[2]; ptr = a; // line 4 b = a; // line 5 }
-
Angela earns ?$2,180 per month before taxes in her? full-time job and ?$810 per month before taxes in her? part-time job. About ?$840 per month is needed to pay taxes and other payroll ded...
-
For the following exercises, rewrite the sum as a product of two functions or the product as a sum of two functions. Give your answer in terms of sines and cosines. Then evaluate the final answer...
-
Sara Holliday must earn a return of 10% on an investment that requires an initial outlay of $2,500 and promises to return $6,000 in 8 years. a. Use present value techniques to estimate the yield on...
-
Congratulations! Your portfolio returned 11% last year, 2% better than the market return of 9%. Your portfolio had a standard deviation of earnings equal to 18%, and the risk-free rate is equal to...
-
Discuss the impact of the Internet on the individual investor and summarize the types of resources it provides.
-
Assume that interest rate parity exists and it will continue to exist in the future. Assume that interest rates of the United States and the United Kingdom vary substantially in many periods. You...
-
Assume that interest rate parity exists and it will continue to exist in the future. Kentucky Co. wants to forecast the value of the Japanese yen in 1 month. The Japanese interest rate is lower than...
-
Assume that interest rate parity exists. Today the 1-year U.S. interest rate is equal to 8 percent, while Mexicos 1-year interest rate is equal to 10 percent. Today the 2- year annualized U.S....
Study smarter with the SolutionInn App