Question: A stock is expected to pay a year - end dividend of $ 2 . 0 0 , i . e . , D 1

A stock is expected to pay a year-end dividend of $2.00, i.e., D1= $2.00. The dividend is expected to decline at a rate of 5% a year forever (g =-5%). If the company is in equilibrium and its expected and required rate of return is 15%, then which of the following statements is CORRECT?
The companys expected capital gains yield is 5%.
The companys current stock price is $20.
The constant growth model cannot be used because the growth rate is negative.
The companys expected stock price at the beginning of next year is $9.50.
The companys dividend yield 5 years from now is expected to be 10%.

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