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#1 (15 points) You are considering the purchase of a stock that just paid a dividend of $3. Its dividends are expected to grow at
| #1 (15 points) You are considering the purchase of a stock that just paid a dividend of $3. Its dividends are expected to grow at 4% in perpetuity. | ||||||||||||
| The stock has a beta of 1.3, the risk-free rate is 3% and the return on an average stock in the market is 9%. | ||||||||||||
| a. What is the required return on this stock? | ||||||||||||
| b. What should you pay for a share of this stock? | ||||||||||||
| c. What is the capital gains yield on this stock? | ||||||||||||
| d. What is the dividend yield on this stock? | ||||||||||||
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Personal Finance
Authors: Jack Kapoor
12th Edition
125996776X, 9781259967764
