Question
QUESTION 1 Part A: Suppose a company has just paid an annual dividend of $2.00 per share. The company expects to grow this dividend at
QUESTION 1
Part A: Suppose a company has just paid an annual dividend of $2.00 per share. The company expects to grow this dividend at an annual rate of 3.0%. The cost of capital for this stock is 10%. What is the expected dividend for next year?
a. $1.85 | ||
b. $1.98 | ||
c. $2.06 | ||
d. $2.17 | ||
e. $2.29 |
Part B: An investor has a portfolio containing two investments. The first is $300,000 invested in the ETF SPY (an ETF that tracks the S&P500, the market portfolio) and the second is $200,000 invested in a savings account with his bank. The risk-free rate is 4.0%, and the expected return on the market is 8.0%. You may assume that the savings account pays the risk-free rate.What is the portfolio's beta (round to 2 decimal places)?
a. .56 | ||
b. .60 | ||
c. .62 | ||
d. .67 | ||
e. .71 |
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