A stock analyst assumes that a stock will not pay its first dividend until 12 years from
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Question:
A stock analyst assumes that a stock will not pay its first dividend until 12 years from today.
The dividend per share (DPS) at that time is assumed to be $6/share, and the DPS is assumed to stay $6/share forever.
The analyst finds a value of the stock today, P0 = $21.03.
What value of the required return does the analyst assume?
a) | .3505 or 35.05% | |
b) | .285 or 28.5% | |
c) | .03505 or 3.505% | |
d) | .10 or 10% |
Related Book For
Fundamentals of Investments
ISBN: 978-0132926171
3rd edition
Authors: Gordon J. Alexander, William F. Sharpe, Jeffery V. Bailey
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