Calculate the price of a stock that has a one-period horizon, is expected to pay a dividend
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Question:
Calculate the price of a stock that has a one-period horizon, is expected to pay a dividend of $.20 per share for the period, with the following prices and associated probabilities forecast at the end of the period:
Probability | 0.3 | 0.1 | 0.2 | 0.3 | 0.1 |
Price | $40 | $45 | $55 | $62 | $70 |
The return on comparable stocks is 8%.
Expert Answer:
To calculate the price of the stock with a oneperiod horizon we need to find the present value of th... View the full answer
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