The ASX 200 index is currently trading at 2325 points and is widely expected to pay...
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The ASX 200 index is currently trading at 2325 points and is widely expected to pay a dividend (DPS₁) equal to 135 points next year. At the same time, shares in MercedesF1 are trading at $78.55 and are expected to pay a dividend next year (DPS₁) equal to $6.65. The consensus analyst forecast is that the growth rate of both MercedesF1 dividends and ASX 200 dividends will be 4.50% in perpetuity. The long-run risk-free rate is given as 5.25%. Assume that the market prices of the ASX 200 index and MercedesF1 are efficient. a) The cost of equity (re) for the ASX 200 is [Select] b) The market risk premium is 5.06% ? c) The cost of equity (re) for MercedesF1 is 12.97% ? d) The implied beta for MercedesF1 is [Select] ? <> ? The ASX 200 index is currently trading at 2325 points and is widely expected to pay a dividend (DPS₁) equal to 135 points next year. At the same time, shares in MercedesF1 are trading at $78.55 and are expected to pay a dividend next year (DPS₁) equal to $6.65. The consensus analyst forecast is that the growth rate of both MercedesF1 dividends and ASX 200 dividends will be 4.50% in perpetuity. The long-run risk-free rate is given as 5.25%. Assume that the market prices of the ASX 200 index and MercedesF1 are efficient. a) The cost of equity (re) for the ASX 200 is [Select] b) The market risk premium is 5.06% ? c) The cost of equity (re) for MercedesF1 is 12.97% ? d) The implied beta for MercedesF1 is [Select] ? <> ?
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Answer rating: 100% (QA)
a To calculate the cost of equity re for ASX 200 you can use the Gordon Growth Model Dividend Discou... View the full answer
Related Book For
Fundamentals Of Investing
ISBN: 9780135175217
14th Edition
Authors: Scott B. Smart, Lawrence J. Gitman, Michael D. Joehnk
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