Question
The expected dividend payment for a common stock is $2.00. The risk-free rate is 5% and the market risk premium is 10%. The stock has
The expected dividend payment for a common stock is $2.00. The risk-free rate is 5% and the market risk premium is 10%. The stock has a beta of 2.
What is the stock's required rate of return?
A. 17.5%
B. 25.0%
C. 15.0%
D. 10.0%
What is the stock's current price if dividends are expected to decrease at 5% per year?
A. $16.00
B. $9.67
C. $ 6.67
D. $10.00
E. $8.00
What is the stock's current price if dividends are expected to increase at 5% per year?
A. $15.00
B. $18.00
C. $10.00
D. $21.29
E. $11.71
What is the stock's current price if dividends are expected to stay unchanged?
A. $16.00
B. $8.00
C. $10.29
D. $12.50
E. $0.71
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