Required information Skip to question The following information applies to the questions displayed below Instructions Use the data tool below to help answer the questions Use the Slider in the Settings to set up the parameters for the graphs and then click Create Graphs to see the impact Click Description for further insight from the author After interacting with the model, press the Reset button to try different scenarios In competitive capital markets, Multiple Choice securities with higher risk are priced to offer a lower expected return all securities with equivalent risk are priced to offer the same expected return all securities are priced to offer the same expected return None of the above Stock Valuation Dividend Growth Model Stock Positions II GRAPH INFORMATION Stock Values for Different Horizons Value Per Share (5) 55 50 An 8 required return, 51 50 dividend, and a stock price of $50 is close to the common stock of Coca Cola Company in December of 2017 According to Morningstar, Coke paid a dividend of $1 48 per share in 2017 with a stock price of $45 82 per share Using analysts' growth expectations of 4 8 from Yahoo Finance, the expected return is 8 03 45 40 35 30 Terminal $48 61 Dividend $1 39 25 20 15 10 5 0 1 2 3 10 20 30 50 100 Investment Horizon (Years) PV (Dividend) PV (Terminal Price) CALCULATIONS FORMULA VARIABLES Required Rate of Return (R) Dividend Growth Rate (9) 8 5 D Po $1 50 8 5 $50 Annual Dividend R 9 $1 50 $50 00 Ourrent Stock Price

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Required information Skip to question [The following information applies to the questions displayed below.] Instructions: Use the data tool below to help answer the questions.

Required information

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[The following information applies to the questions displayed below.] Instructions: Use the data tool below to help answer the questions. Use the Slider in the "Settings" to set up the parameters for the graphs and then click Create Graphs to see the impact. Click Description for further insight from the author. After interacting with the model, press the "Reset" button to try different scenarios. image text in transcribed

In competitive capital markets,

Multiple Choice

securities with higher risk are priced to offer a lower expected return.
all securities with equivalent risk are priced to offer the same expected return.
all securities are priced to offer the same expected return.
None of the above.

Stock Valuation Dividend Growth Model Stock Positions II. GRAPH INFORMATION Stock Values for Different Horizons Value Per Share (5) 55 50 An 8% required return, 51.50 dividend, and a stock price of $50 is close to the common stock of Coca Cola Company in December of 2017. According to Morningstar, Coke paid a dividend of $1.48 per share in 2017 with a stock price of $45.82 per share. Using analysts' growth expectations of 4.8% from Yahoo! Finance, the expected return is 8.03% 45 40 35 30 Terminal: $48.61 Dividend: $1.39 25 20 15 10 5 0 1 2 3 10 20 30 50 100 Investment Horizon (Years) PV (Dividend) PV (Terminal Price) CALCULATIONS FORMULA VARIABLES Required Rate of Return (R) Dividend Growth Rate (9) 8% 5% D Po $1.50 8% - 5% $50 Annual Dividend R-9 $1.50 $50.00 Ourrent Stock Price