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You are a financial analyst and are comparing two stocks. For Stock A, you expect that it will pay a dividend of 60 dollars next
You are a financial analyst and are comparing two stocks. For Stock A, you expect that it will pay a dividend of 60 dollars next year and you expect these dividends to grow at a rate of 3% per annum. The required return on this stock is 11%. For Stock B, you expect that it will pay constant dividends of 5 with a required return on Stock B of 12%. What is the difference in stock price? Calculate the difference as price of Stock A minus the price of Stock B. a. 386.90 b. 520.15 c. 708.33 d. 790.83
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