As an equities analyst researching KYMG Ltd, you are trying to determine whether the current share price is fairly priced
As an equities analyst researching KYMG Ltd, you are trying to determine whether the current share price is fairly priced or not. You have obtained the following information:
- KYMG is expected to pay a constant annual dividend of $0.40 per share forever with the next dividend due in a year.
- The current share price is $4.65.
- The variance of KYMG's stock returns is 0.42, and its correlation with the market portfolio is +0.8.
- The current risk-free interest rate is 2% per year, the expected market return is 9% per year, and the variance of the market risk premium is 0.33.
Given this information, what can you conclude about the share price?
RegIncome Pty Ltd is a company that pays its shareholders a very regular and consistent dividend stream forever: an $0.09 dividend at the end of every month except December, and a large $1.00 dividend every December. What is the total equity value for RegIncome on 1st January 2021 given the following information:
- The cost of equity capital is a 10% effective annual rate.
- The total number of shares outstanding is 250,000.
- Assume the first dividend ($0.09) is in exactly 1 month from today, then 2 months, and so on. The next $1.00 annual dividend is in exactly 1 year from today.
Any intermediate steps should be rounded to 4 or more decimal places. Provide your FINAL answer to the nearest dollar and exclude the dollar sign ($). For e.g., $10,784.6518 should be input as 10785.
Two uncorrelated assets have the same expected return of 10% p.a. and the same standard deviation of 20% p.a.
What is the standard deviation of a portfolio that is equally weighted in these two assets?
Any intermediate steps should be rounded to 4 or more decimal places. Provide your FINAL answer in DECIMAL form (not percentage form!) to the nearest 4th decimal place.
Due to her high tolerance for risk, Molly Neldrum invests the $1 million inheritance she has just received in a leveraged portfolio of the Developing Markets Index (which has a beta of 2) and the risk-free rate. The weight Molly has assigned to the Developing Markets Index is 200%. Given the expected market risk premium is 5% p.a. and the risk-free rate is 2% p.a., what is the expected value of Molly's inheritance in exactly 3 years time?
Any intermediate steps should be rounded to 4 or more decimal places.