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Lets say there is a share of stock here. Its price is $10 right now. The ROE of this firm is 0.3. The plowback ratio
Lets say there is a share of stock here. Its price is $10 right now. The ROE of this firm is 0.3. The plowback ratio here is 60%. It means that this firm uses 60% of its net income for reinvestment. The dividend distributed today is $2 per share. What is the interest rate if its dividend grows with a constant rate? If the risk-free interest rate is 1% today and the return of the market portfolio is 3% today, what is the beta coefficient of this stock? (use the interest rate from the constant DDM as the return of this stock)
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