Question
IBM Investors require an annual 12% return on common stock that pays a quarterly dividend of 75 cents. The first dividend will be paid one
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IBM Investors require an annual 12% return on common stock that pays a quarterly dividend of 75 cents. The first dividend will be paid one year from now. Investors believe IBM will increase dividends by 3% annually forever. What should be the stock price of IBM?
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You purchased an annual interest coupon bond one year ago that had 9 years remaining to maturity at that time. The coupon interest rate was 10% and the par value was $1,000. At the time you purchased the bond, the yield to maturity was 8%. If you sold the bond after receiving the first interest payment and the yield to maturity continued to be 8%, your annual total rate of return on holding the bond for that year would have been _________.
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