Question
1) The minimum required rate of return you need to earn is 17%. You expect the dividend in the next period is $4. The current
1) The minimum required rate of return you need to earn is 17%. You expect the dividend in the next period is $4. The current market price of the stock is $35.2 the growth rate of dividends is 4.2% what is going to happen to the market price? (Increase? Decrease? Not change? Increase then decrease? Decrease then increase?)
2) a mutual fund manager recommend you to buy a stock at $23 which has the following information: The current dividend(D0) = $3 Constant growth rate of dividend = 0% The required rate of return on the stock = 14.2% What is your investment decision? (Buy? Not Buy? Same? Not enough information?)
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