Question: Suppose that stockbrokers have projected that Jamestown Savings will pay
Suppose that stockbrokers have projected that Jamestown Savings will pay a dividend of $2.50 per share on its common stock at the end of the year; a dividend of $3.25 per share is expected for the next year, and $4.00 per share in the following two years. The risk-adjusted cost of capital for banks in Jamestown’s risk class is 15 percent. If an investor holding Jamestown’s stock plans to hold that stock for only four years and hopes to sell it at a price of $50 per share, what should the value of the bank’s stock be in today’s market?
Answer to relevant QuestionsOriole Savings Association has a ratio of equity capital to total assets of 9 percent. In contrast, Cardinal Savings reports an equity-capital-to-asset ratio of 7 percent. What is the value of the equity multiplier for each ...Suppose a stockholder-owned thrift institution is projected to achieve a 0.90 percent ROA during the coming year. What must its ratio of total assets to equity capital be if it is to achieve its target ROE of 12 percent? If ...What do the following terms mean: Asset management? Liability management? Funds management?Peoples’ Savings Bank has a cumulative gap for the coming year of + $135 million, and interest rates are expected to fall by two and a half percentage points. Can you calculate the expected change in net interest income ...When is a financial firm asset sensitive? Liability sensitive?
Post your question