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FINS2618-Capital Markets & Institution - T2 2026
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A defensive stock has a beta of 0.8. The current yield on Australian government securities is 3%, and investors expect the overall market portfolio to earn 9% per annum.
Using CAPM, what is the cost of equity for the stock?
A stock trading at $90 undergoes a 3-for-1 stock split.
What is the theoretical post-split price?
A stock trading at $8 undergoes a 1-for-4 reverse split.
What is the theoretical new share price?
A stock just paid a dividend of $2.00. Dividends are expected to grow at 5% forever. Required return is 11%.
What is the stock value?
Under Modigliani-Miller (without taxes), increasing leverage: