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Assume that the risk-free rate of interest is 6% and the expected rate of return on the market is 16%. A share of stock sells
Assume that the risk-free rate of interest is 6% and the expected rate of return on the market is 16%. A share of stock sells for 50 today. It will pay a dividend of 6 per share at the end of the year. Its beta is 1.2. What do investors expect the stock to sell for at the end of the year? 55 49 53 50 A firm pays a current dividend of $1.00 which is expected to grow at a rate of 5% indefinitely. If current value of the firm's shares is $35.00, what is the required return applicable to the investment based on the constant-growth dividend discount model? 8.00 percent 7.25 percent 6.00 percent 5.91 percent
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