Answer Question

You observe a stock price of $18.75. You

expect a dividend growth rate of 5% and

the most recent dividend was $1.50. What

is the required return?

What are some of the major characteristics

of common stock?

What are some of the major characteristics

of preferred stock?

What is the value of a stock that is

expected to pay a constant dividend of $2

per year if the required return is 15%?

What if the company starts increasing

dividends by 3% per year, beginning with

the next dividend? Assume that the

required return stays at 15%.