For five utility stocks, the table below provides the expected dividend for next year, the current...
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For five utility stocks, the table below provides the expected dividend for next year, the current market price, the expected dividend growth rate, and the beta. The risk-free rate is currently 5.3 percent, and the market risk premium is 6.0 percent. Dividend Price Dividend Growth Rate (g) Beta (B) Stock (Di) (Po) American Electric (NYSE: AEP) Consolidated Edison (NYSE: ED) 2.40 46.17 0.60 5.0% 0.60 2.20 39.80 5.0 64.12 Exelon Corp. (NYSE: EXC) Southern Co. (NYSE: SO) 1.69 7.0 0.80 1.34 23.25 5.5 0.65 60.13 0.65 Dominion Resources (NYSE: D) 2.58 5.5 A. Calculate the expected rate of return for each stock using the Gordon growth model. B. Calculate the required rate of return for each stock using the CAPM For five utility stocks, the table below provides the expected dividend for next year, the current market price, the expected dividend growth rate, and the beta. The risk-free rate is currently 5.3 percent, and the market risk premium is 6.0 percent. Dividend Price Dividend Growth Rate (g) Beta (B) Stock (Di) (Po) American Electric (NYSE: AEP) Consolidated Edison (NYSE: ED) 2.40 46.17 0.60 5.0% 0.60 2.20 39.80 5.0 64.12 Exelon Corp. (NYSE: EXC) Southern Co. (NYSE: SO) 1.69 7.0 0.80 1.34 23.25 5.5 0.65 60.13 0.65 Dominion Resources (NYSE: D) 2.58 5.5 A. Calculate the expected rate of return for each stock using the Gordon growth model. B. Calculate the required rate of return for each stock using the CAPM
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Related Book For
Essentials of Statistics for the Behavioral Sciences
ISBN: 978-1464107771
3rd edition
Authors: Susan A. Nolan
Posted Date:
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