1 Consider the common stock of the company Using the growth rate implied by the dividends paid five years ago and the most recent dividend as a constant growth rate, an expected return of 12 5 and the Constant Growth Model, calculate the value of the company 's common stock 2 Using your valuation d...

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1- Consider the common stock of the company. Using the growth rate implied by the dividends paid...

Question:

1- Consider the of the company. Using the growth rate implied by the dividends paid five years ago and the most recent as a constant growth rate, an of 12.5% and the Constant Growth Model, calculate the value of the company's common stock.
2- Using your valuation date as a reference, and the stock price information obtained, (i) if you purchased 100 shares of your company's 5 years ago, what would be your dollar and percentage returns on the stock?
3- What is the 5-year average return on the stock?
4- Using the standard deviation of returns as the measure of risk, what is the volatility/risk of the stock?
5- Using the Coefficient of Variation as a measure of the amount of risk (volatility) per unit of return, how would you describe the relative merit of investing in this stock (hint: compare with key competitor and application market index).
6- Using historical stock returns data for the firm and an applicable market run a regression of firm return (dependent variable) and market return (independent variable) and determine the beta for the stock.
7- Key investment risks: what industry, market, and company-specific factors may result in your company's stock being a bad investment?
Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on... Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their... Expected Return
The expected return is the profit or loss an investor anticipates on an investment that has known or anticipated rates of return (RoR). It is calculated by multiplying potential outcomes by the chances of them occurring and then totaling these... Portfolio
A portfolio is a grouping of financial assets such as stocks, bonds, commodities, currencies and cash equivalents, as well as their fund counterparts, including mutual, exchange-traded and closed funds. A portfolio can also consist of non-publicly...