Question
As you know, any individual's view of opportunity cost is likely to be different from others'. Prices in the market - whether bonds or stocks
As you know, any individual's view of opportunity cost is likely to be different from others'. Prices in the market - whether bonds or stocks - communicate something about what market participants overall see as opportunity cost. Or, in more market specific terms, required returns.
So say you see that Fake Company Zeta closed today at $18.27. You also know that the company just announced its most recent annual dividend of $1.97. Plus, the company has a history of increasing dividends about 1.9% each year. Given this information, what is the market communicating about a required return on this stock?
Because you should be accustomed to working with four decimals, enter your answer as a decimal and rounded to the nearest fourth decimal. Do not enter as a percent. Do not use percent signs, dollar signs, or commas.
For example, if you calculated 0.1147, you would enter 0.1147. If you are working with more than four decimals and calculated 0.09286, then enter 0.0929.
With the explanation and examples above, no credit is given for answers entered incorrectly. Answers are considered correct + or - 0.0050.
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