Go to the St. Louis Federal Reserve FRED database, and find data on net corporate dividend payments
Question:
a. Calculate the average annual growth rate of dividends from 1960 to the most recent year of data available.
b. Find data on the Dow Jones Industrial Average (DJIA) for the most recent day of data available. Suppose that a $100 dividend is paid out at the end of next year. Use the Gordon growth model and your answer to part (a) to calculate the rate of return that would be required for equity investment over the next year, assuming you could buy a share of DJIA.
Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...
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a From 1960 to 2013 the average growth ra...View the full answer
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Related Book For 
The Economics of Money Banking and Financial Markets
ISBN: 978-0133836790
11th edition
Authors: Frederic S. Mishkin
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