Question
1.ABC stock has an expected ROE of 12% per year, expected earnings per share of $2, and expected dividends of $1.5 per share. Its market
1.ABC stock has an expected ROE of 12% per year, expected earnings per share of $2, and expected dividends of $1.5 per share. Its market capitalization rate is 10% per year.
a.What are its expected growth rate, its price, and its PE ratio?
b.If the retention ratio were 0.4, what would be the expected dividend per share, the growth rate, price, and the PE ratio?
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Essentials of Investments
Authors: Zvi Bodie, Alex Kane, Alan J. Marcus
10th edition
77835425, 978-0077835422
