Practice Assignment #7

15. According to the constant dividend growth model (Gordon Model); capital gains yield is equal to : a. risk-free rate b. Dividend yield c. Required rate of return on the stock d. the dividend growth rate e. none of the given answers 16. Company A is expected to pay an year-end dividend of $6 per share of its common stock. The current price of the stock is $100. After the dividend payment the stock is expected to sell at $90 per share. Then the dividend yield on the stock is: 17. a. 6.67% b. -10% c. 18% d. 6% e. none of the given ones If the rate of return on stock is 14% (R.) and the risk-free rate (Re) is 5%, & Standard deviation of returns = 18% then the risk premium (RP) is: a. 5% b. 19% c. 14% d. 10% 0.9%