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Share Price Management 1. von Bora Corporation (Berk and DeMarzo (2006)) The firm is expected to pay a dividend of $1.40 per share at the
Share Price Management 1. von Bora Corporation (Berk and DeMarzo (2006)) The firm is expected to pay a dividend of $1.40 per share at the end of this year and a $1.50 dividend per share at the end of the second year. You expect the stock price to be $25.00 at the end of two years. The company's cost of capital is 10%. (e) What is your dividend yield from holding the stock one year? (f) What is your total return? (g) Suppose you purchase the stock right after the payment of the first dividend, and then you sell the stock right after the payment of the second dividend. What is your capital gains rate? (h) Suppose you purchase the stock right after the payment of the first dividend, and then you sell the stock right after the payment of the second dividend. What is your divided yield? 4) What is vour total return
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