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An analyst gathered the following information for a subject company: current stock price $35.00 current dividend payment $2.35 risk-free rate 5.5% expected market return 10.8%
An analyst gathered the following information for a subject company: current stock price $35.00 current dividend payment $2.35 risk-free rate 5.5% expected market return 10.8% dividend growth rate 4.0% common stock beta 0.95 The company's return on common equity using the capital asset pricing model (CAPM) and the dividend discount model (DDM) are closest to:
CAPM DDM
a. 10.5% 10.7%
b. 10.5% 11.0%
c. 15.8% 10.7%
d. 15.8% 11.0%
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