We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.
Nobody downloaded yet

Financail Management - Risk and Capital - Essay Example

Comments (0)
Assignment Data: Risk free rate of interest rate on 10 year US Treasury bond: = 3.40% Beta of the Stock (IBM) = 1.64 Market Risk Premium = 7.5% Current Annual Dividend = 0.80 3 Year Annual Dividend Rate = 8.2% Industry P/E = 23.2 Earnings per Share = $ 4.87 Calculation of Required rate of return: According to the Capital Asset Pricing Model Required rate of return = 3.40 + 1.64(7.5) Required Rate of Return = k = 15.7% Constant Growth Model D1= D0 (1+g) D1= 0.80 (1+0.082) = 0.8656 The market price of the stock is $ 128 which is far more greater than the price estimated from the Gordon Dividend Model…
Download full paper
Financail Management - Risk and Capital
Read TextPreview

Extract of sample
Financail Management - Risk and Capital

Download file to see previous pages... Secondly we might have underestimated the growth rate which has a dramatic impact on the price of the stock. The higher the growth rate, the greater the price of the stock will be and it is expected that in the high-tech industry, a company such as IBM holds great expectation and it must have a better growth rate than what we have expected. Therefore by increasing the dividend growth rate and current annual dividend we can get a better estimate from this model. This model underestimates the value of the stock in firms that consistently payout less than they can afford and accumulate cash in process. Changed Market Risk Premium: Required rate of return = 3.40 + 1.64(10) Required Rate of Return = k = 19.8% Constant Growth Model D1= D0 (1+g) D1= 0.80 (1+0.082) = 0.8656 As we have increased the required rate of return, we are assuming a greater risk with the stock which in turn decreases the value of the stock as it can be seen from the above calculations. This also differs drastically from the market price due to the reason mentioned above. ...Download file to see next pagesRead More
Comments (0)
Click to create a comment
Control projects, capital management, risk management and evaluation
The researcher will be seeking out answers to the following questions: What are the main risk and safety concerns in the activities of the projects? How can these risks be managed? Should a single system framework be implemented? What measures can be taken in the risk control procedures? Why are changes to the Safe Management System necessary? What does it mean for the organisation and our people?
28 Pages(7000 words)Essay
Risk Management
Infrastructural construction industry has underwent significant changes over the last few years with much focus being directed towards limitation of risks and challenges encountered during the process. Risk assessment utilizes various tool combinations which helps in identification of those risks considered detrimental to successful implementation of the project.
10 Pages(2500 words)Essay
Risk management
The investments in housing, real estate and properties were lucrative in the initial days. The investors had the opportunity to multiply their amount of investment in a short period of time due to appreciation of prices of the land properties. In addition to that the US government also passed laws to ensure that all the citizens of US irrespective of their financial status should have land ownership rights.
12 Pages(3000 words)Essay
Risk Management
While the course has offered diversified elements of risk management, I considered some lessons and themes more significant. This paper identifies the important themes and makes recommendations to the U.S. government, the Federal Reserve, and large multinational manufacturer of consumer personal care products for coping with risks over the next 1-3 years.
5 Pages(1250 words)Essay
Risk and Risk Management
Originally, the purpose of country risk assessment was to identify risks that could affect a borrower's ability to repay according to the terms of the loan. The concept has since been extended; and banks have integrated country risk assessment into their daily operations and use it as a tool for tasks such as strategic planning, marketing, and evaluation of the performance of their international portfolios.
20 Pages(5000 words)Essay
Risk Management
Secondly compliance with legal and regulatory requirements is a very important goal in the sphere of event risk management. For instance a certain sports event being organized by authorities might need a facility such
5 Pages(1250 words)Essay
Risk management
management of cost base, foreign exchange rate exposures, inability to obtain required price increase, geopolitical tensions and major impact of climate change. This has shown the effects of these into the company’s profitability and value generation from which threats and
13 Pages(3250 words)Essay
Capital budgeting, Risk, Return, CAPM
This gives the importance of purchasing the3 instrument via a loan which is more profitable to the company. b) In no case should Darth have leased the Death star for any case because leasing will always be expensive for
3 Pages(750 words)Assignment
Risk Management
s in understanding and measuring the influence of the threat involved and thus making decision on the suitable procedures and controls to accomplish them (John n.d.) Risk analysis, evaluation and management are the phase where the degree of the threats and their nature are
8 Pages(2000 words)Essay
5 Risk Capital Financing Sources
to acquire a $300,000 investment from 3 business angels in order to collect funds enough to for it to showcase its hybrid bottled drink to different bars and clubs Businesses can have a running idea on how much they can get for such venture capital. Knowing these beforehand
10 Pages(2500 words)Book Report/Review
Let us find you another Essay on topic Financail Management - Risk and Capital for FREE!
Contact us:
Contact Us Now
FREE Mobile Apps:
  • About StudentShare
  • Testimonials
  • FAQ
  • Blog
  • Free Essays
  • New Essays
  • Essays
  • The Newest Essay Topics
  • Index samples by all dates
Join us:
Contact Us