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Computer stocks currently provide an expected rate of return of 17%. MBI, a large computer company, will pay a year-end dividend of $2.20 per share.
Computer stocks currently provide an expected rate of return of 17%. MBI, a large computer company, will pay a year-end dividend of $2.20 per share. a. If the stock is selling at $52 per share, what must be the market's expectation of the dividend growth rate? (Round your answer to 2 decimal places.) Growth rate % b. If dividend growth forecasts for MBI are revised downward to 7% per year, what will happen to the price of MBI stock? The price will rise. The price will fall. c. What (qualitatively) will happen to the company's price-earnings ratio? The price-earnings ratio will rise. The price-earnings ratio will fall
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