(ii) The ordinary shares of FED Limited are selling for $26.75 on the open market. A dividend...
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(ii) The ordinary shares of FED Limited are selling for $26.75 on the open market. A dividend of $3.68 is expected to be distributed, and the growth rate of this company is estimated to be 5.5%. If Bob Dean, an average investor, is considering purchasing this share at the market price, what is his expected rate of return? (3 marks)
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(iii) What rate of return is expected from a stock that sells for $30 per share, pays $1.50 annually in dividends, and is expected to sell for $33 per share in one year? (2 marks)
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