Question: Suppose your manager asks you to look into two stocks, Microsoft and Apple. Microsoft has a Price/Dividend ratio of 33, while Apples Price/Dividend ratio is

Suppose your manager asks you to look into two stocks, Microsoft and Apple. Microsoft has a Price/Dividend ratio of 33, while Apple’s Price/Dividend ratio is 45. What could cause the difference in their P/D ratio? Can you say anything about these stocks’ expected returns and what are the caveats?

Step by Step Solution

★★★★★

3.46 Rating (172 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock

Computation of the following Microsoft has a PriceDividend ratio of 33 Apples ... View full answer

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Document Format (1 attachment)

68-B-A-F-S (3087).docx

120 KBs Word File

Students Have Also Explored These Related Accounting Questions!

While auditing a client, the CEO asks you to look carefully at the cash flow. You notice that cash flows have decreased every year. Upon learning of your findings, the CEO remarks, I seem to bring in...

The mechanical components division manager asks you to recommend a make/buy decision on a major automotive subassembly that is currently purchased externally for a total of $3.9 million this year....

Your manager asks you to explore whether or not a Program Management Office (PMO) would help bring more predictability and control to your firm. While many projects have been very successful and...

6.1. Carbondale Company has the following credit policy 2/10, net 30. Carbondale also charges 1% per month interest on all accounts after 30 days. The following table shows the collection schedule of...

8.1. Dulles Electric Company buys 1 million tons of coal annually to burn at its power plant. The company wants to invest in a unit train that will haul coal from the mine to the power house, where...

Why did venture capitalists believe that subscriptions are the clearest way around a difficult advertising world? How did they evaluate the startup adopted in this model? Why do they estimate that an...

help on number 11 and 13 answer number 11 and 13 11. What is Apple's Inventory cost flow assumption? Compared with other alternatives, ceteris paribus, how does the chosen assumption affect Apple's...

Throughout this course, you have researched a wealth of data and analytics to construct a comprehensive financial analysis and proposal (excluding tables, figures, and addenda) of a chosen company...

Throughout this course, you will prepare a comprehensive financial analysis and proposal (excluding tables, figures, and addenda) that will demonstrate your understanding of key financial concepts,...

Consider the two (excess return) index-model regression results for stocks A and B. The risk-free rate over the period was 6%, and the markets average return was 14%. Performance is measured using an...

Bond Sold Between Interest Payment Dates, Sold at Premium. Teter Company issued $ 700,000 par value, five- year, 3% bonds on November 30, 2016. The bonds are dated July 1, 2016, and pay interest...

Lebron loaned $20,000 to his daughter to help her buy a house. When she sold the house four years later, she paid him the $20,000 along with an interest of $3,000. What was the annual interest rate?...

What does the "NOPAT margin" exclude in its calculation? Operating expenses Depreciation and interest expenses Interest expenses Taxes

What is meant by effective thinking? What is its relevance to entrepreneurs?

Kraft Enterprises owns the following assets at December 31, 2010. What amount should be reported ascash? Cash in bank-savings account Checking account balance Postdated checks Certificates of deposit...

Restin Co. uses the gross method to record sales made on credit. On June 1, 2010, it made sales of $50,000 with terms 3/15, n/45. On June 12, 2010, Restin received full payment for the June 1 sale....

Use the information from BE7-2, assuming Restin Co. uses the net method to account for cash discounts. Prepare the required journal entries for Restin Co.

What would be the value of cell B7? A B C 1 Last Dividend $0.75 2 Required Return 12% 3 Growth Rate 1 8% 4 Growth Rate 2 3% 5 Growth Rate 1 Time 5 6 Transition Period 6 7 Intrinsic Value...

11. Tiktak clothing mart has the Opening inventory of RO 78, 400, Purchases of RO 94,600, Purchase discount of RO 1,750, Purchases return and allowances of RO 2,500, Transportation in of RO 1,100 and...

6. The data set below contains the number of partners in a cohort of rising accounting firms that have been tagged as "firms to watch." Complete parts (a) thro below. 32 31 16 19 16 14 19 34 27 27 30...