You intend to purchase Adam Berhad common stock at RM43.60 per share, hold it for one year
Question:
You intend to purchase Adam Berhad common stock at RM43.60 per share, hold it for one year and sell it after you received the dividend, the price of the stock at the end of the year is RM46.30. The dividend at year end is expected to be RM4.80.
How much the value of the stock if required rate of return is 15 percent?
b. You are considering investing in preferred stock. The market price of preferred stock is RM70 and pays an annual dividend of RM6.50. Your required rate of return for this stock is 12 percent.
Calculate the value of this preferred stock.
QUESTION:
a. Encik Ridzuan owns 100 shares of Gunner's preferred stocks which currently sell for RM12 per share and pay annual dividends of RM0.80 per share.
What is the value of preferred stock if the required rate of return is 8 percent?
b. You bought a stock for RM25 and the dividend payment is expected to be at RM1.25. If your required rate of return is 15 percent and expected dividend growth at a constant rate of 'g', what is the expected value of the stock 3 years from today?
c. Differentiate between common stock and preferred stock.
Fundamentals Of Corporate Finance
ISBN: 9780135811603
5th Edition
Authors: Jonathan Berk, Peter DeMarzo, Jarrad Harford