Author Question: Tangshan China's stock is currently selling for 160.00 per share and the firm's dividends are ... (Read 54 times)

clippers! · **on:** Jul 10, 2018

Tangshan China's stock is currently selling for 160.00 per share and the firm's dividends are expected to grow at 5 percent indefinitely. In addition, Tangshan China's most recent dividend was 5.50.

If the expected risk free rate of return is 3 percent, the expected market premium is 4 percent, and Tangshan has a beta of 1.2, Tangshan's stock would be ________.
A) overvalued because the market price is higher than the resulting share value
B) undervalued because the market price is less than the resulting share value
C) overvalued because the resulting share value is higher than the market value
D) undervalued because the resulting share value is less than the market value

Question 2

Which alternative below is not a bond retirement method?

A)

Redemption at maturity
B)

Forced liquidation
C)

Exercising a bond call
D)

Conversion into shares of common stock