Question
A stock analyst assumes that a stock will not pay its first dividend until 12 years from today. The dividend per share (DPS) at that
A stock analyst assumes that a stock will not pay its first dividend until 12 years from today.
The dividend per share (DPS) at that time is assumed to be $6/share, and the DPS is assumed to stay $6/share forever.
The analyst finds a value of the stock today, P0 = $21.03.
What value of the required return does the analyst assume?
| a) | .3505 or 35.05% | |
| b) | .285 or 28.5% | |
| c) | .03505 or 3.505% | |
| d) | .10 or 10% |
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The Expected Return for these Cash flows Required Rate ...
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Fundamentals of Investments
Authors: Gordon J. Alexander, William F. Sharpe, Jeffery V. Bailey
3rd edition
132926172, 978-0132926171
