Calculate the required rate of return using the Capital Asset Pricing Model (CAPM).

Gloria the
InvestorGloria is
a seasoned sales manager with a very large international company.Although she has a great deal of experience
with sales, she has little experience with investing. Gloria has been investing
in her company’s 401K plan. However she has decided to invest some extra money
on her own. Gloria has $75,000 she would like to invest. Since she
has recently signed up for internet access to a broker, she is allowed a small
number of phone calls to a broker at no additional charge to her. She calls
ABC investments and talks with a Mr. Bill. She tells Mr. Bill she would like to
invest in stocks and can he recommend the best way to value a company’s stock.
Mr. Bill said she should research four companies and using the constant growth
model, select the company with the best value. CompanyCurrent stock 2017 Dividend Average
dividendBetaPrice growthVerizon?$2.362.9%?Wells
Fargo?$1.561.3%?Exxon
Mobil?$3.082.7%?Macy’s?$1.512.4%?Duke
Energy?$3.562.1%?Facebook?$00?**
You will be required to research each company’s current market price and its
beta.US
Treasury Rate2.388%S&P
Average Return7%Answer the
following questions.1.Calculate
the required rate of return using the Capital Asset Pricing Model (CAPM). 2.Using
the constant growth formula (as known as the Gordon Growth Model), calculate
the intrinsic value of each stock.3.Compare
the values you calculated in question 2, do the values closely approximate the
stock’s current price? If not why not?4.Which
stock, using your calculations would you recommend Gloria invest in, and why?5.Based
on your calculations, is the Gordon Growth Model an appropriate for to be used
for valuing stocks? If not why not?6.Does,
your calculations support the “Market Efficiency” theory?
week_4_gloria_the_investor.docx

Unformatted Attachment Preview

Don't use plagiarized sources. Get Your Custom Essay on
Calculate the required rate of return using the Capital Asset Pricing Model (CAPM).
Just from $13/Page
Order Essay

Gloria the Investor
Gloria is a seasoned sales manager with a very large international company. Although she has a great deal of
experience with sales, she has little experience with investing. Gloria has been investing in her company’s
401K plan. However she has decided to invest some extra money on her own. Gloria has $75,000 she would
like to invest.
Since she has recently signed up for internet access to a broker, she is allowed a small number of phone calls to
a broker at no additional charge to her.
She calls ABC investments and talks with a Mr. Bill. She tells Mr. Bill she would like to invest in stocks and
can he recommend the best way to value a company’s stock. Mr. Bill said she should research four companies
and using the constant growth model, select the company with the best value.
Company
Current stock
Price
2017 Dividend
Average dividend
growth
Beta
Verizon
?
$2.36
2.9%
?
Wells Fargo
?
$1.56
1.3%
?
Exxon Mobil
?
$3.08
2.7%
?
Macy’s
?
$1.51
2.4%
?
Duke Energy
?
$3.56
2.1%
?
Facebook
?
$0
0
?
** You will be required to research each company’s current market price and its beta.
US Treasury Rate 2.388%
S&P Average Return 7%
Answer the following questions.
1. Calculate the required rate of return using the Capital Asset Pricing Model (CAPM).
2. Using the constant growth formula (as known as the Gordon Growth Model), calculate the intrinsic
value of each stock.
3. Compare the values you calculated in question 2, do the values closely approximate the stock’s
current price? If not why not?
4. Which stock, using your calculations would you recommend Gloria invest in, and why?
5. Based on your calculations, is the Gordon Growth Model an appropriate for to be used for valuing
stocks? If not why not?
6. Does, your calculations support the “Market Efficiency” theory?

Purchase answer to see full
attachment

GradeAcers
Calculate your paper price
Pages (550 words)
Approximate price: -

Why Work with Us

Top Quality and Well-Researched Papers

We always make sure that writers follow all your instructions precisely. You can choose your academic level: high school, college/university or professional, and we will assign a writer who has a respective degree.

Professional and Experienced Academic Writers

We have a team of professional writers with experience in academic and business writing. Many are native speakers and able to perform any task for which you need help.

Free Unlimited Revisions

If you think we missed something, send your order for a free revision. You have 10 days to submit the order for review after you have received the final document. You can do this yourself after logging into your personal account or by contacting our support.

Prompt Delivery and 100% Money-Back-Guarantee

All papers are always delivered on time. In case we need more time to master your paper, we may contact you regarding the deadline extension. In case you cannot provide us with more time, a 100% refund is guaranteed.

Original & Confidential

We use several writing tools checks to ensure that all documents you receive are free from plagiarism. Our editors carefully review all quotations in the text. We also promise maximum confidentiality in all of our services.

24/7 Customer Support

Our support agents are available 24 hours a day 7 days a week and committed to providing you with the best customer experience. Get in touch whenever you need any assistance.

Try it now!

Calculate the price of your order

Total price:
$0.00

How it works?

Follow these simple steps to get your paper done

Place your order

Fill in the order form and provide all details of your assignment.

Proceed with the payment

Choose the payment system that suits you most.

Receive the final file

Once your paper is ready, we will email it to you.

Our Services

No need to work on your paper at night. Sleep tight, we will cover your back. We offer all kinds of writing services.

Essays

Essay Writing Service

No matter what kind of academic paper you need and how urgent you need it, you are welcome to choose your academic level and the type of your paper at an affordable price. We take care of all your paper needs and give a 24/7 customer care support system.

Admissions

Admission Essays & Business Writing Help

An admission essay is an essay or other written statement by a candidate, often a potential student enrolling in a college, university, or graduate school. You can be rest assurred that through our service we will write the best admission essay for you.

Reviews

Editing Support

Our academic writers and editors make the necessary changes to your paper so that it is polished. We also format your document by correctly quoting the sources and creating reference lists in the formats APA, Harvard, MLA, Chicago / Turabian.

Reviews

Revision Support

If you think your paper could be improved, you can request a review. In this case, your paper will be checked by the writer or assigned to an editor. You can use this option as many times as you see fit. This is free because we want you to be completely satisfied with the service offered.

Order your essay today and save 15% with the discount code DISCOUNT15