Question
Risk free rate = 0,05 Expected return on stock A = 0,0950 Standard deviation of the return on stock A = 0,3 Beta-value of stock
Risk free rate = 0,05
Expected return on stock A = 0,0950
Standard deviation of the return on stock A = 0,3
Beta-value of stock A = 1,5
Yearly dividend paid at the end of 2018 = 12
Expected dividend growth = 0,02
Expected return on the market portfolio = 0,08
Standard deviation of the return on the market portfolio = 0,14
Beta-value of the market portfolio = 1
Question 1: what is the current market price for one share of stock A on December 31, 2018 after the dividend has been paid?
Question 2: What is the market price of one share of stock A on December 31, 2019 just BEFORE the dividend is paid?
Question 3: What is the percentage return on December 31, 2019 AFTER the dividend has been paid if you bought one share of stock A on December 31, 2018 and you sell it now?
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