Question
Hok owns investment A and 1 share of stock B. The total value of his holdings is $1,760. Investment A is expected to pay annual
Hok owns investment A and 1 share of stock B. The total value of his holdings is $1,760. Investment A is expected to pay annual cash flows to Hok of $310 per year with the first annual cash flow expected in 1 year from today and the last annual cash flow expected in 7 years from today. Investment A has an expected return of 11.92 percent. Stock B is expected to pay its next annual dividend in 1 year. Stock B has an expected return of 14.51 percent and is expected to be priced at $372.32 in 1 year, just after the dividend is paid. What is the dividend in 1 year expected to be for stock B?
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