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Suppose that a firm is expected to pay a dividend of $2 next year. Thereafter, the nominal dividend growth rate is expected to be 8%
Suppose that a firm is expected to pay a dividend of $2 next year. Thereafter, the nominal dividend growth rate is expected to be 8% for four years and then it will be 3% per year forever. The annual nominal discount rate is 12% and the inflation rate is expected to be 2% annually.
What is the expected capital gains yield on the stock from the end of year 3 to the end of year 4?
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