Suppose you are considering buying a stock. The stock is currently trading for $105. You expect the price in one year to be $110 and it will pay a dividend of $2. What is the dividend yield? LO4

1.90%

3.57%

1.82%

4.76%

Suppose you are considering buying a stock. The stock is currently trading for $105. You expect the price in one year to be $110 and it will pay a dividend of $2. What is the capital gains? LO4

3.57%

1.90%

4.76%

1.82%

Suppose you are considering buying a stock. The stock is currently trading for $298. You expect the price in one year to be $301 and it will pay a dividend of $4. You estimate the stocks beta at 1.2, the risk-free rate at 3%, and the expected return on the market at 9%. According to the CAPM, what is the maximum price you should be willing to pay for this stock? LO3

$273.14

$276.77

$298.00

$305.00

A share of preferred stock is currently trading for $80 and pays a dividend of $2 per year, with the next dividend due one year from today. What is your expected rate of return if you were to buy the stock today.

40%

42.5%

2.3%

2.5%