HW for Module6Financial Management Homework (Chapter 7: Stocks and Stock Valuation and Chapter 8: Risk and Return)Part I: Calculation (Chapter 7).1. A stock is expected to pay a dividend of $0.75 at the end of the year. The required rate of return is rs = 10.5%, and the expected constant growth rate is g = 6.4%. What is the stock’s current price? (Answer: 18.29)2. A stock just paid a dividend of D0 = $1.50. The required rate of return is rs = 10.1%, and the constant growth rate is g = 4.0%. What is the current stock price? (Answer: 25.57)3. Farmers Market is expected to pay a dividend of $3.25 per share at the end of the year. The stock sells for $32.50 per share, and its required rate of return is 13%. The dividend is expected to grow at some constant rate, g, forever. What is the equilibrium expected growth rate? (Answer: 3%)4. The Crescent Corporation just paid a dividend of $2.00 per share and is expected to continue paying the same amount each year for the next 4 years. If you have a required rate of return of 13%, plan to hold the stock for 4 years, and are confident that it will sell for $30 at the end of 4 years, How much should you offer to buy it at today? (Answer: $24.35)5. Nachman Industries just paid a dividend of D0 = $1.32. Analysts expect the company’s dividend to grow by 30% this year, by 10% in Year 2, and at a constant rate of 5% in Year 3 and thereafter. The required return on this low-risk stock is 9.00%. What is the best estimate of the stocks current market value?(Answer: $44.87)6. Using the historical dividend information provided below to calculate the constant growth rate, and a required rate of return of 18%, estimate the price of Nigel Enterprises common stock at the beginning of 2009. (Answer: growth rate: 15.7%, price:$65.40).gif”>Part II: Reading questions: (The set of questions are designed to better prepare you for the next module. Please carefully review the required reading for Module 7)1. What are the two parameters for selecting investments in the finance world? How do investors try to get the most out of their investment with regard to these two parameters?2. Referring to table 8.2 in the textbook, what type of investment has had the highest return on average and the largest variance from 19501999? What type of investment has had the lowest return on average and the smallest variance from 19501999?3. What does it mean to diversify your portfolio, and what are you trying to gain by so doing?4. What is a positive correlation between two assets returns? What is a negative correlation between two assets returns? Which correlation is better for reducing the variance of a portfolio made up of two assets?5. What is the difference between unsystematic and systematic risk? Which risk can you avoid? Which risk can you not avoid?6. What is beta in the financial world? What is standard deviation in the financial world? What type of risk does each measure? What assumption do you make about the stock when you use beta as a measure of its risk?7. When you invest in the stock market and unfortunately lose all of your investment money, how much is your investment return?Part 2Watch these videos.youtube.com/watch?v=ef0_9Y_srEA”>https://www.youtube.com/watch?v=ef0_9Y_srEA.youtube.com/watch?v=XE39u2zJSwg”>https://www.youtube.com/watch?v=XE39u2zJSwgand answer these questionsAll questions should be answered.1. What can you learn from Professor Siegel’s discussion on long-run investment?2.Compared to Warren Buffet, what do you see the difference or similarity between Mr. Buffet and Professor Siegel?3. What strategies would you like to apply if you are an investment adviser managing MSMCs endowment funds?Your initial post for the three questions should in total have a minimum of 250 words and less than 400 words. Quality is what matters!3. Peer responses should not be I agree with you, Ditto, That is very informative, etc. Those do not count as qualified responses. You response should facilitate the discussion and provide useful information so that others can BENEFIT from your posting. Respond to at least TWO peer postings.Peer 11 What can you learn from Professor Siegel’s discussion on long-run investment??2 Compared to Warren Buffet, what do you see the difference or similarity between Mr. Buffet and Professor Siegel??3. What strategies would you like to apply if you are an investment adviser managing MSMCs endowment funds??1. What can you learn from Professor Siegel’s discussion on long-run investment?2.Compared to Warren Buffet, what do you see the difference or similarity between Mr. Buffet and Professor Siegel?3. What strategies would you like to apply if you are an investment adviser managing MSMCs endowment funds?HW for Module6Financial Management Homework (Chapter 7: Stocks and Stock Valuation and Chapter 8: Risk and Return)Part I: Calculation (Chapter 7).1. A stock is expected to pay a dividend of $0.75 at the end of the year. The required rate of return is rs = 10.5%, and the expected constant growth rate is g = 6.4%. What is the stock’s current price? (Answer: 18.29)2. A stock just paid a dividend of D0 = $1.50. The required rate of return is rs = 10.1%, and the constant growth rate is g = 4.0%. What is the current stock price? (Answer: 25.57)3. Farmers Market is expected to pay a dividend of $3.25 per share at the end of the year. The stock sells for $32.50 per share, and its required rate of return is 13%. The dividend is expected to grow at some constant rate, g, forever. What is the equilibrium expected growth rate? (Answer: 3%)4. The Crescent Corporation just paid a dividend of $2.00 per share and is expected to continue paying the same amount each year for the next 4 years. If you have a required rate of return of 13%, plan to hold the stock for 4 years, and are confident that it will sell for $30 at the end of 4 years, How much should you offer to buy it at today? (Answer: $24.35)5. Nachman Industries just paid a dividend of D0 = $1.32. Analysts expect the company’s dividend to grow by 30% this year, by 10% in Year 2, and at a constant rate of 5% in Year 3 and thereafter. The required return on this low-risk stock is 9.00%. What is the best estimate of the stocks current market value?(Answer: $44.87)6. Using the historical dividend information provided below to calculate the constant growth rate, and a required rate of return of 18%, estimate the price of Nigel Enterprises common stock at the beginning of 2009. (Answer: growth rate: 15.7%, price:$65.40)Part II: Reading questions: (The set of questions are designed to better prepare you for the next module. Please carefully review the required reading for Module 7)1. What are the two parameters for selecting investments in the finance world? How do investors try to get the most out of their investment with regard to these two parameters?2. Referring to table 8.2 in the textbook, what type of investment has had the highest return on average and the largest variance from 19501999? What type of investment has had the lowest return on average and the smallest variance from 19501999?3. What does it mean to diversify your portfolio, and what are you trying to gain by so doing?4. What is a positive correlation between two assets returns? What is a negative correlation between two assets returns? Which correlation is better for reducing the variance of a portfolio made up of two assets?5. What is the difference between unsystematic and systematic risk? Which risk can you avoid? Which risk can you not avoid?6. What is beta in the financial world? What is standard deviation in the financial world? What type of risk does each measure? What assumption do you make about the stock when you use beta as a measure of its risk?7. When you invest in the stock market and unfortunately lose all of your investment money, how much is your investment return?Part 2Watch these videos.youtube.com/watch?v=ef0_9Y_srEA”>https://www.youtube.com/watch?v=ef0_9Y_srEA.youtube.com/watch?v=XE39u2zJSwg”>https://www.youtube.com/watch?v=XE39u2zJSwgand answer these questionsAll questions should be answered.1. What can you learn from Professor Siegel’s discussion on long-run investment?2.Compared to Warren Buffet, what do you see the difference or similarity between Mr. Buffet and Professor Siegel?3. What strategies would you like to apply if you are an investment adviser managing MSMCs endowment funds?Your initial post for the three questions should in total have a minimum of 250 words and less than 400 words. Quality is what matters!3. Peer responses should not be I agree with you, Ditto, That is very informative, etc. Those do not count as qualified responses. You response should facilitate the discussion and provide useful information so that others can BENEFIT from your posting. Respond to at least TWO peer postings.Peer 11 What can you learn from Professor Siegel’s discussion on long-run investment??2 Compared to Warren Buffet, what do you see the difference or similarity between Mr. Buffet and Professor Siegel??3. What strategies would you like to apply if you are an investment adviser managing MSMCs endowment funds??1. What can you learn from Professor Siegel’s discussion on long-run investment?2.Compared to Warren Buffet, what do you see the difference or similarity between Mr. Buffet and Professor Siegel?3. What strategies would you like to apply if you are an investment adviser managing MSMCs endowment funds?