Question
You are considering the purchase of a stock that just paid a dividend of $3. Its dividends are expected to grow at 4% in perpetuity.
You are considering the purchase of a stock that just paid a dividend of $3. Its dividends are expected to grow at 4% in perpetuity.
The stock has a beta of 1.3, the risk-free rate is 3% and the return on an average stock in the market is 9%.
a. What is the required return on this stock?
b. What should you pay for a share of this stock?
c.What is the capital gains yield on this stock?
d. What is the dividend yield on this stock?
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Foundations of Financial Management
Authors: Stanley Block, Geoffrey Hirt, Bartley Danielsen, Doug Short, Michael Perretta
10th Canadian edition
1259261018, 1259261015, 978-1259024979
