Question
RIO's companys ordinary shares are expected to pay $ 1.4 per share in dividends for 6 years and after which the dividends are expected to
RIO's companys ordinary shares are expected to pay $ 1.4 per share in dividends for 6 years and after which the dividends are expected to grow at 1.4% annually forever. RIO's shares have a beta of 1.5. The long-term return of ASX200 is 8.7% and the market risk premium is 6%.
a.What is the expected return of RIOs shares according to the CAPM?
b.What is the implied price per share?
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Public Finance A Contemporary Application Of Theory To Policy
Authors: David N Hyman
12th Edition
0357442156, 978-0357442159
