Answered step by step
Verified Expert Solution
Question
1 Approved Answer
The companys beta is 1.25 and its Dividend growth rate is 14.86^ just yesterday it paid a dividend of $1.75. Todays share price is $63.
The companys beta is 1.25 and its
Dividend growth rate is 14.86^ just yesterday it paid a dividend of $1.75. Todays share price is $63. You believe the share price moves in accordance with the dividend constant growth model. The economy wide risk free interest rate is 4.5% and the expected risk premium for the market portfolio is 9.5%. What is required rate of return nd expected rate of return for the stock? Should you buy it? Why or why not
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started