The following stock quotation were recently reported in The Wall Street Journal:
10.3 AT&T T 3.6 21 39.43 0.26
0.1 Boeing BA 1.6 31 88.91 -0.85
-8.7 JohnsJohns JNJ 2.5 16 60.26 -0.08
a. What are the dividend yields on the common stock of AT&T Boeing, and Johnson & Johnson?
b. What possible explanation can you give for the differences in the common stock dividend yields observed in Part A?
c. What is the current price-earnings ratio for Boeing and Johnson & Johnson?
d. What possible explanation can you give for the difference in the price-earnings ratio observed in Part C?
e. What was the previous day's closing price for AT&T's common stock?
-a: The dividend yield for AT&T is 3.6%; for Boeing it is 1.6%; and for Johnson & Johnson it is 2.5%.
-b: The difference is the expected earnings and dividend growth, with AT&T likely having the lowest expected growth and Boeing the highest expected growth.
-c: P/E for Boeing = 31 times , P/E for Johnson and Johnson = 16 times
-d: Boeing’s higher expected growth rate more than offsets the relatively lower expected risk of Johnson & Johnson, Boeing has the higher P/E ratio which indicate the investor's expectations about their future returns.
To determine the answers to the questions, we need to understand the information provided in the stock quotation.
The stock quotation consists of several columns:
1. Percentage Change: It represents the change in stock price from the previous day's closing price.
2. Company Name: It indicates the name of the company whose stock is being quoted.
3. Ticker Symbol: It represents the unique symbol used to identify the company's stock on stock exchanges.
4. Dividend Yield: It indicates the dividend yield of the company's common stock.
5. Price-Earnings Ratio (P/E Ratio): It represents the price-earnings ratio of the company's common stock.
6. Stock Price: It shows the current stock price.
7. Net Change: It represents the change in stock price from the previous day's closing price.
Now let's answer each question based on this information.
a. To find the dividend yields, we look at the "Dividend Yield" column in the stock quotation. The dividend yields for AT&T, Boeing, and Johnson & Johnson are as follows:
- AT&T (T): 3.6%
- Boeing (BA): 1.6%
- Johnson & Johnson (JNJ): 2.5%
b. The differences in dividend yields could be due to various factors such as the company's profitability, dividend policies, or market conditions.
c. To find the current price-earnings ratio, we need to look at the "P/E Ratio" column in the stock quotation. The current price-earnings ratios for Boeing and Johnson & Johnson are as follows:
- Boeing (BA): 31
- Johnson & Johnson (JNJ): 16
d. The difference in the price-earnings ratio could be influenced by factors such as the company's growth prospects, industry comparables, or investor sentiment.
e. Unfortunately, the provided stock quotation does not include the previous day's closing price for AT&T's common stock. We would need additional information to determine the previous day's closing price for AT&T's common stock.
Note: The stock quotation provided is a sample, and the values mentioned are not reflective of real-time data. To get the most accurate and up-to-date information about stock prices, dividend yields, and price-earnings ratios, it is recommended to refer to reliable financial news sources or stock market websites.