Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Marketing Management Expert

By walking through the set of financial data for XYZ, this assignment would help you better understand how theoretical stock prices are computed and how prices might react to market forces like risk and interest rates. You would use both the CAPM (capital asset pricing model) and the constant growth model (CGM) to arrive at XYZ's stock price.
Demonstrate all work, including formulae and calculations used to arrive at financial values.

Assignment Guidelines:

i) Determine an estimate of the risk-free rate of interest (krf). To get this value, go to Bloomberg.com: Market Data and use the "U.S. 10-year Treasury" bond rate (middle column) as the risk-free rate. In addition, you also need a value for the market risk premium. Use an assumed market risk premium of 7.5%.

ii) Download XYZ Stock Information by clicking the link.

iii) Using the information from the XYZ Stock Information document, record the following values:

• iXYZ's beta (ß)

• XYZ's current annual dividend

• XYZ's 3-year dividend growth rate (g)

• Industry P/E

• XYZ's EPS

iv) With the information you recorded, use the CAPM to find out XYZ's required rate of return (ks).

v) Use the CGM to find the current stock price for XYZ. We will call this the theoretical price (Po).

vi) Now use the XYZ Stock Information to find XYZ's current stock quote (P). Compare Po and P and answer the following problems:

• Are there any differences?

• What factors may be at work for such a difference in the two prices?

vii) Now suppose the market risk premium has increased from 7.5% to 10% and this increase is due only to the increased risk in the market. In other words, assume the krf and the stock's beta remains the same for this exercise.

• What would the new price be? Describe.

viii) Refind out XYZ's stock price using the P/E ratio model and the needed info found in the XYZ Stock Information file.

• Why is the present stock price different from price arrived at using CGM (Constant Growth Model)?

ix)) If you used Microsoft Word to arrive at your answers, then you should provide an explanation of the formulas and calculations.

Assignment must include the following:

x) A double-spaced Word document of 2–3 pages which contains the following:

• All of the numerical values listed in the assignment guidelines.

• Your answers to the four problems in the assignment guidelines.

• The formulas and calculations that you used to arrive at your answers 

xi) You should include your description of how you used Microsoft Excel for your calculations if applicable.

Marketing Management, Management Studies

  • Category:- Marketing Management
  • Reference No.:- M93120

Have any Question? 


Related Questions in Marketing Management

List the six major elements of the physical distribution

List the six major elements of the physical distribution system along with the focus area for each.

What is product life cycle what are the different stages of

What is product life cycle? What are the different stages of product life cycle? Identify and describe each stage in your own words. Describe at least two distinct promotion strategies marketers should adopt for any prod ...

Course name marketingnbsptopic marketing study about

Course name: Marketing   Topic: Marketing study about Infinity model QX80 Increase Infiniti QX80 market share in UAE for big luxury SUV cars market by implementing market strategy for QX80 with main competitors. Number o ...

Resources hospitality marketing plan phase 1 hospitality

Resources: Hospitality Marketing Plan Phase 1, Hospitality Marketing Plan Phase 2 Write a 1,750- to 2,450-word Marketing Plan. Your budget is $100,000. Be sure to include an executive summary section that addresses the i ...

Demonstrate the impact of wireless technologyhow many

DEMONSTRATE THE IMPACT OF WIRELESS TECHNOLOGY How many devices do you own or use that transmit signals (not just computer data) wirelessly? Think of as many as you can, and make a list showing the different types of sign ...

1 for what five things does e-collaboration provide

1. For what five things does e-collaboration provide support? 2. What is the difference between a social network site and a social networking system? 3. What is open-source information?

Research about creating new productnbspchoosen the topic is

Research about creating new product. Choosen the topic is Henna remover which is like a body scrub that removes henna that will be invented by ( Clarins cosmetics). Provide answer to strategic focus and plan part which i ...

Assignment marketing communication processcommunicating is

Assignment: Marketing Communication Process Communicating is an important marketing process of conveying our message to our customers and prospects. We use certain media based upon their ability to meet communication goa ...

1 what are the main differences between a decentralized

1. What are the main differences between a decentralized infrastructure and a centralized infrastructure? 2. How does a client/server infrastructure work? 3. What are the four types of a tiered infrastructure?

Assignment the following assignment relates to the

Assignment: The following assignment relates to "The Millionaire Next Door" and your consumer behavior ebook "Buying, Having, Being" by Solomon. Purpose: The intent of the assignment/project is for you to: (1) demonstrat ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

WalMart Identification of theory and critical discussion

Drawing on the prescribed text and/or relevant academic literature, produce a paper which discusses the nature of group

Section onea in an atwood machine suppose two objects of

SECTION ONE (a) In an Atwood Machine, suppose two objects of unequal mass are hung vertically over a frictionless

Part 1you work in hr for a company that operates a factory

Part 1: You work in HR for a company that operates a factory manufacturing fiberglass. There are several hundred empl

Details on advanced accounting paperthis paper is intended

DETAILS ON ADVANCED ACCOUNTING PAPER This paper is intended for students to apply the theoretical knowledge around ac

Create a provider database and related reports and queries

Create a provider database and related reports and queries to capture contact information for potential PC component pro