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The Abby stock pays a dividend in the amount of $5.78 25 The growth rate of dividends is a constant 6.25% 26 The current stock

The Abby stock pays a dividend in the amount of $5.78
25 The growth rate of dividends is a constant 6.25%
26 The current stock price is $31.00
27 The prevailing Treasury bill rate is 2.70%
28 The average return on the S&P 500 Index is 13.00%
29 The Abby Corp. is involved in wildcat drilling for oil in the midwest.
30 The stock carries a beta of 2.0
31 What is the Expected Rate of Return?
32 What is the Required Rate of Return?
a.

Expected Rate of Return = 36.06%

Required Rate of Return = 33.09%

b.

Expected Rate of Return = 25.06%

Required Rate of Return = 25.09%

c.

Expected Rate of Return = 46.06%

Required Rate of Return = 43.09%

d.

Expected Rate of Return = 26.06%

Required Rate of Return = 23.09%

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