1. You hold a portfolio with the following securities: Security Percent of portfolio Return Stock A 57% 0.0% Stock B 16% 16.4% Stock C Please calculate it 7.0% Calculate the expected return of portfolio.
2. How much are you willing to pay for one share of Salmon Brothers Co. stock today if the company just paid a $0.70 annual dividend, the dividends increase by 2 percent annually, and you require a 10 percent rate of return? (Compute P0)
3. Netflix Corp. just paid a dividend of $1.30 per share. The dividends are expected to grow at 23% for the next 8 years and then level off to a growth rate of 6% forever. If the required return is 12%, what is the price of the stock today (P0)? (Hint: two-stage growth model)