Question
1.AC's common stock just paid a $7 dividend. If the stock is currently selling for $30 and the growth rate in dividends is expected to
1.AC's common stock just paid a $7 dividend. If the stock is currently selling for $30 and the growth rate in dividends is expected to be 5%, what is the expected return of this stock?
2. The common stock of ISPO is expected to pay a dividend of $10. If the stock is currently selling for $55 and the growth rate in dividends is expected to be 2%, what is the expected return of this stock?
3. You recently calculated the expected return for a stock to be 14%. If the stock has a required return of 10%, should you buy or not buy (sell) this stock?
Buy because it is undervalued | ||
Buy because it is overvalued | ||
Sell because it is undervalued | ||
Sell because it is overvalued |
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