1. What is the value of a stock that is expected to pay a constant dividend of $2 per year if the required return is 15%?

What if the company starts increasing dividends by 3% per year, beginning with the next dividend? The required return stays at 15%.

1. You observe a stock price of $18.75. You expect a dividend growth rate of 5%, and the most recent dividend was $1.50. What is the required return?

What are some of the major characteristics of common stock?

What are some of the major characteristics of preferred stock?

Ethics issues

The status of pension funding (i.e., over- vs. under-funded) depends heavily on the choice of a discount rate. When actuaries are choosing the appropriate rate, should they give greater priority to future pension recipients, management, or shareholders?

How has the increasing availability and use of the internet impacted the ability of stock traders to act unethically?

Comprehensive exam

XYZ stock currently sells for $50 per share. The next expected annual dividend is $2, and the growth rate is 6%. What is the expected rate of return on this stock?

If the required rate of return on this stock were 12%, what would the stock price be, and what would the dividend yield be?