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Consider four different stocks, all of which have a required return of 18.5 percent and a most recent dividend of $3.15 per share. Stocks W,
Consider four different stocks, all of which have a required return of 18.5 percent and a most recent dividend of $3.15 per share. Stocks W, X, and Y are expected to maintain constant growth rates in dividends for the foreseeable future of 11.5 percent, 0 percent, and 6 percent per year, respectively. Stock Z is a growth stock that will increase its dividend by 20.5 percent for the next two years and then maintain a constant 13.5 percent growth rate, thereafter. |
a. | What is the dividend yield for each of these four stocks? (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) | |
b. | What is the expected capital gains yield for each of these four stocks? (A negative answer should be indicated by a minus sign. Leave no cells blank - be certain to enter "0" wherever required. Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) |
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