Question
RIO's company's ordinary shares are expected to pay$ 1.4 1.4 per share in dividends for 4 4 years and after which the dividends are expected
RIO's company's ordinary shares are expected to pay$ 1.4
1.4 per share in dividends for 4
4 years and after which the dividends are expected to grow at 1.1
1.1% annually forever. CompanyABC's shares have a beta of 1.5
1.5. Thelong-term return of ASX200 is 8.5
8.5% and the market risk premium is 4
4%.
a.What is the expected return ofRIO's shares according to theCAPM?
b.What is the implied price pershare?
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Matlab An Introduction with Applications
Authors: Amos Gilat
5th edition
1118629868, 978-1118801802, 1118801806, 978-1118629864
