Assume the following information for Nasdaq Composite on January 2015: Trading at 12.8 times earnings Average...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Assume the following information for Nasdaq Composite on January 2015: Trading at 12.8 times earnings Average Dividend Yield T-bond rate Real expected growth rate Expected inflation Market risk premium 2.30% 4.00% 3.00% 4.00% 8.00% a) Based upon these inputs, estimate the appropriate P/E ratio for the Nasdaq Composite? (Round answer to two decimals). b) What growth rate in dividends/earnings would justify the P/E ratio on January 2015? (Answer with two decimals in %). Assume the following information for Nasdaq Composite on January 2015: Trading at 12.8 times earnings Average Dividend Yield T-bond rate Real expected growth rate Expected inflation Market risk premium 2.30% 4.00% 3.00% 4.00% 8.00% a) Based upon these inputs, estimate the appropriate P/E ratio for the Nasdaq Composite? (Round answer to two decimals). b) What growth rate in dividends/earnings would justify the P/E ratio on January 2015? (Answer with two decimals in %).
Expert Answer:
Answer rating: 100% (QA)
a To estimate the appropriate PE ratio for the Nasdaq Composite we can use the follow... View the full answer
Related Book For
Fundamentals of Investments, Valuation and Management
ISBN: 978-1259720697
8th edition
Authors: Bradford Jordan, Thomas Miller, Steve Dolvin
Posted Date:
Students also viewed these accounting questions
-
Assume the following information for existing zero-coupon bonds: Par value = $100,000 Maturity = 3 years Required rate of return by investors = 12% How much should investors be willing to pay for...
-
Assume the following information for the demand and supply curves for good Z. a. Draw the corresponding supply and demand curves. b. What are the equilibrium price and quantity traded? c. Would a...
-
Assume the following information for an IT project. Probability of Failure Consequences of Failure Maturity = .7 . Cost = .9 Complexity = .7 . Schedule = .7 Dependency = .5 Performance = .3 Client...
-
Give the order of magnitude () for the following algorithm. Explain why your answer is correct. GET VALUES for A1, A2, ..., An, and B, B2, ..., Ba Get value of n /* set i equal to 1 */ /* for each of...
-
The income statement of Rolls Royce Group Plc., a U.K. automotive manufacturer, for the year ended December 31, 2007, reported revenues of 7,435 and cost of sales of 6,003. In addition, it reported...
-
Devin Wolf Company has the following balances in selected accounts on December 31, 2024. Devin has a calendar year end. All the accounts have normal balances. The information below has been gathered...
-
We are separating methanol and water in a staged distillation column at total reflux to determine Murphree efficiency. Pressure is \(101.3 \mathrm{kPa}\). The column has a 2.0 -in. head of liquid on...
-
Christine Guthrie was recently hired by S&S Air Inc. to assist the company with its short-term financial planning and to evaluate the companys performance. Christine graduated from university five...
-
How do you develop a work breakdown structure ( WBS )
-
The beginning inventory of merchandise at Dunne Co. and data on purchases and sales for a three-month period ending June 30 are as follows: Instructions 1. Record the inventory, purchases, and cost...
-
Clearly describe 10 - 15 individual data flows that are important to your organization's activities. Data flows should be described with associated business activities. For example, if your company...
-
What are two interesting concepts in the article, "Affective influences on cognition: Mood congruence, mood dependence, and mood effects on processing strategies"? Why is one of these concepts...
-
5: According to the U.S. Census Bureau, world population will increase from 6.52 bil- lion in 2006 to 9.30 billion by 2050. Calculate the average annual growth rate for that period. Now I 6: Use the...
-
It is early 2006, and Martin Harris, Alliance Concrete's new CFO, is asked to provide a valuation of the company, which needs to include a careful analysis of possible changes in economic drivers...
-
Define cognition and identify the building blocks of cognition.? Describe the distinctions between early approaches and contemporary cognitive approaches to introspection, unconscious cognition, and...
-
How many of the following are legal declarations? String lion [] = new String[] {"lion"}; String tiger [] = new String[1] {"tiger"}; String bear [] = new String[] {}; String cat [] = new String[0] {};
-
NYPD overwhelmingly stopped and still does stop mostly African-Americans and Hispanics in high-crime areas for no reason and would search them for weapons. Some who support the stop and frisk policy...
-
What exactly is a prima facie duty? How does an ethic of prima facie duties differ from monistic and absolutist ethical theories?
-
What is the value of a call option if the underlying stock price is $73, the strike price is $75, the underlying stock volatility is 37 percent, and the risk-free rate is 5 percent? Assume the option...
-
Given your answers in Problems 2730, do you feel Beagle Beauties is overvalued or undervalued at its current price of around $82? At what price do you feel the stock should sell? Beagle Beauties...
-
A Treasury bond with the longest maturity (30 years) has an ask price quoted at 99.4375. The coupon rate is 4.6 percent, paid semiannually. What is the yield to maturity of this bond?
-
Indicate whether each of the cost control methods listed in a through \(f\) is (1) preventive, (2) corrective, or (3) diagnostic. a. Preparation of an annual production budget of variable and fixed...
-
Choose letter \(\mathrm{C}\) (for committed fixed cost) or \(\mathrm{D}\) (for discretionary fixed cost) to indicate the type of each of the following described costs. a. Professional meeting...
-
The following data are from a recent General Electric Company annual report. All amounts, except per share data, are in \(\$\) millions. Required Compute the following ratios for the General Electric...
Study smarter with the SolutionInn App