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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. 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
-
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
-
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.
Expert Solution
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.
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