Question
You wish to earn 10% on each of two stocks, A and B. Each of the stocks is expected to pay a dividend of $2
You wish to earn 10% on each of two stocks, A and B. Each of the stocks is expected to pay a dividend of $2 per share in the upcoming year. The expected growth rate of dividend is 6% for stock A and 5% for stock B. According to the constant growth dividend discount model, the intrinsic (fair) value of stock A will be
- higher than that of stock B.
- the same as that of stock B.
- lower than that of stock B.
- fluctuating more than that of stock B.
- fluctuating less than that of stock B.
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Focus On Personal Finance
Authors: Jack Kapoor, Les Dlabay, Robert Hughes, Melissa Hart
6th Edition
125991965X, 978-1259919657
