Question: 9 . Stock Valuation and Required Return [ LO 1 ] Red, Inc, Yellow Corp, and Blue Company each will pay a dividend of

9 .

Stock Valuation and Required Return

[

1]

Red, Inc, Yellow Corp, and Blue Company each will pay a dividend of

\ (\

3.75 \)

next year. The growth rate in dividends for all three companies is

4

percent. The required return for each company's stock is

8

percent,

11

percent, and

14

percent, respectively. What is the stock price for each company? What do you conclude about the relationship between the required return and the stock price?

9 . Stock Valuation and Required Return [ LO 1 ]

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