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A stock is expected to pay a year-end dividend of $2.00, i.e., D1= $2.00. The dividend is expected to decline at a rate of 5%
A stock is expected to pay a year-end dividend of $2.00, i.e., D1= $2.00. The dividend is expected to decline at a rate of 5% a year forever ( g=5%). If the company is in equilibrium and its expected and required rate of return is 15%, which of the following statements is CORRECT? The company's expected stock price one year from now is $9.50. The company's expected capital gains yield is 5%. The company's dividend yield 5 years from now is expected to be 10% The constant growth model cannot be used because the growth rate is negative. The company's current stock price is $20
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