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Homework answers / question archive / 1)bmit all and finish' button on the 'Summary of Multiple choice questions Coral Coast Printers Ltd's preferred stock is selling for $30 per share

1)bmit all and finish' button on the 'Summary of Multiple choice questions Coral Coast Printers Ltd's preferred stock is selling for $30 per share

Finance

1)bmit all and finish' button on the 'Summary of Multiple choice questions Coral Coast Printers Ltd's preferred stock is selling for $30 per share. What is the expected dividend of year four if the required rate of return is 7.5 percent? Select one: $2.25. $3.00. Next page $2.00 $3.25.

2)

QUESTION 5

  1. If two assets with return correlation coefficients equal to one make up a portfolio, then the portfolio does not take advantage of any diversification benefits.

    True

    False

1 points   

QUESTION 6

  1. A nannying business could diversify by:

       

    offering services in different locations

       

    offering both long-term care and casual babysitting

       

    obtaining funding from different sources (for example, a bank loan and family)

       

    all of the above

    Which is an example of diversification?

       

    Investing in different investment classes (for example, property and shares and cash)

       

    Investing in companies from different industries

       

    investing in companies from different parts of the world

       

    all of the above

    1 points   

    QUESTION 8

    Diversification is commonly explained with the phrase:

       

    "Don't put all your eggs in one basket"

       

    "Always invest everything you have into ONE single thing"

       

    "Investors require compensation (return) for holding a particular level of risk"

       

    "Don't put the cart before the horse"

    ......................

    A collection of investments held by a person or organisation is called:

       

    lots of money

       

    a portfolio

       

    infinite possiblity

       

    a bucket

    1 points   

    QUESTION 10

    If you are building a portfolio, then you desire assets that have a correlation coefficient of one.

    True

    False

    please make sure that the answer correct.

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1)

What is the expected dividend of year 4 if the required rate is 7.5%?

Answer: $3.00

Working

Since we are asked to find the year 4 dividends, first we will find out current dividend and from current dividend we will calculate year 4 dividend. Formula for calculating current dividend is as follows;

Current Dividend             = Share price * required rate of dividend

                                                = $30 * .075

                                                = $2.25

Where,

Share price = $30 (provided in the question)

Required rate of return = 7.5% (provided in the question)

Now we will calculate dividend in year 4 using the current dividend calculated above. Formula for calculating future dividend is as follows;

Future dividend = Current Dividend * (1 +R)N

                                = $2.25 * (1.075)4

                                = $2.25 * 1.335469

                                = $3.00

Where,

Current Dividend = $2.25 (Calculated above)

R = required rate of return = 7.5% (provided in the question)

N = Number of years = 4

2)

REASSON: COEFFICIENT OF CORRELATION: It shows the relationship or association between two variable.It expresses the degree of closeness between two variables .The value of r ranges between -1 and + 1

+1 = It is a Perfect Positive Correlated Portfolio and Portfolio Risk will be Maximum.

QUESTION 6: ANS: all of the above

QUESTION 8: AND: "Don't put all your eggs in one basket"

A collection of investments held by a person or organisation is called A PORTFOLIO:

QUESTION 10: ANS: FALSE

REASSON: COEFFICIENT OF CORRELATION: It shows the relationship or association between two variable.It expresses the degree of closeness between two variables .The value of r ranges between -1 and + 1

-1 = It is a Perfect Negative Correlated Portfolio and Portfolio Risk will be minimum.