Home Depot's (HD) stock price is $400.  HD's current earnings are $12 and its current dividend is $6 per share.  HD's beta is 1.2, the risk-free rate is 1%, and the expected market return is 7%.  

Report all answers as a percentage rounded to one decimal place, e.g. "1.2%".

(a) What is HD's plow-back ratio?

 

 

 

(b) What growth rate is the market pricing in for HD?

 

 

 

(c) Your own analysis predicts that HD's growth rate will be 7.2%.  You decide to buy HD.  Soon after, news comes that HD's growth rate will indeed be 7.2% and HD's stock price adjusts to reflect this.  You decide to sell HD.  What was your holding period return (not annualized)?

 

Answer rating: 100% (QA)

a The plowback ratio also known as the retention ratio is the proportion of earnings that a company ... View the full answer