An analyst wants to give a recommendation whether the ordinary shares issued by ABCD issuers are...
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An analyst wants to give a recommendation whether the ordinary shares issued by ABCD issuers are worth buying by investors or not. At the end of 2018, ABCD shares were traded on the stock exchange at a price of 4,000 per share and ABCD issuers distributed cash dividends of 250 per share of common stock. At that time, the risk-free interest rate was 8% and the market yield was 15%. ABCD stock is known to have a beta of 1.1. The analyst concerned then prepares the dividend projections that will be distributed by ABCD issuers over the next four years as follows: Year 2019 2020 2021 2022 Dividend 280 310 340 365 If from 2023 onwards ABCD's stock dividend is assumed to experience constant growth of 8% per year, explain what recommendations analysts should give investors! An analyst wants to give a recommendation whether the ordinary shares issued by ABCD issuers are worth buying by investors or not. At the end of 2018, ABCD shares were traded on the stock exchange at a price of 4,000 per share and ABCD issuers distributed cash dividends of 250 per share of common stock. At that time, the risk-free interest rate was 8% and the market yield was 15%. ABCD stock is known to have a beta of 1.1. The analyst concerned then prepares the dividend projections that will be distributed by ABCD issuers over the next four years as follows: Year 2019 2020 2021 2022 Dividend 280 310 340 365 If from 2023 onwards ABCD's stock dividend is assumed to experience constant growth of 8% per year, explain what recommendations analysts should give investors!
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Answer rating: 100% (QA)
To determine whether ABCD shares are worth buying or not the analyst can use the dividend discount m... View the full answer
Related Book For
Smith and Roberson Business Law
ISBN: 978-0538473637
15th Edition
Authors: Richard A. Mann, Barry S. Roberts
Posted Date:
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