a. Consider two investment opportunities A and B. Investment A: Expected return =0.08, Standard deviation = 0.06 Investment B: Expected return = 0.24, Standard deviation 0.08 Which investment would you choose A or B? Provide the rationale behind your decision. b. If company is selecting projects with the negative NPV, what impact this decision would have on the share price of the company c. While forecasting future sales, internal sales forecast is more appropriate or external sales forecast? d. Why are dividends the basis for the valuation of common stock? e. When the constant growth dividend valuation model is used to explain a stock's current price, the quantity (ke - g) represents the expected dividend yield. Is this statement right or wrong? Explain.
a. Consider two investment opportunities A and B. Investment A: Expected return =0.08, Standard deviation = 0.06 Investment B: Expected return = 0.24, Standard deviation 0.08 Which investment would you choose A or B? Provide the rationale behind your decision. b. If company is selecting projects with the negative NPV, what impact this decision would have on the share price of the company c. While forecasting future sales, internal sales forecast is more appropriate or external sales forecast? d. Why are dividends the basis for the valuation of common stock? e. When the constant growth dividend valuation model is used to explain a stock's current price, the quantity (ke - g) represents the expected dividend yield. Is this statement right or wrong? Explain.
Essentials of Business Analytics (MindTap Course List)
2nd Edition
ISBN:9781305627734
Author:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson
Publisher:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson
Chapter15: Decision Analysis
Section: Chapter Questions
Problem 13P: The following profit payoff table was presented in Problem 1:
The probabilities for the states of...
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![Consider two investment opportunities A and B.
Investment A:
Expected return = 0.08, Standard deviation = 0.06
Investment B:
Expected return = 0.24, Standard deviation = 0.08
Which investment would you choose A or B? Provide the rationale behind your decision.
b. If company is selecting projects with the negative NPV, what impact this decision would
have on the share price of the company
c. While forecasting future sales, internal sales forecast is more appropriate or external sales
forecast?
d. Why are dividends the basis for the valuation of common stock?
e. When the constant growth dividend valuation model is used to explain a stock's current
price, the quantity (ke - g) represents the expected dividend yield. Is this statement right
or wrong? Explain.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fbad681eb-392c-415c-b785-f56b4b7c72a5%2Fbb7407f3-d641-49b1-86a2-7df74f92a653%2Fy22tvvh_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Consider two investment opportunities A and B.
Investment A:
Expected return = 0.08, Standard deviation = 0.06
Investment B:
Expected return = 0.24, Standard deviation = 0.08
Which investment would you choose A or B? Provide the rationale behind your decision.
b. If company is selecting projects with the negative NPV, what impact this decision would
have on the share price of the company
c. While forecasting future sales, internal sales forecast is more appropriate or external sales
forecast?
d. Why are dividends the basis for the valuation of common stock?
e. When the constant growth dividend valuation model is used to explain a stock's current
price, the quantity (ke - g) represents the expected dividend yield. Is this statement right
or wrong? Explain.
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