Problem #3 Imagine that at time t a given stock pays a dividend of 10 per share? Furthermore, assume that dividends are expected to grow at 8% and that investors demand a return of 10% for holding such a stock? i) What is the price of a single share at time t? ii) What is the rate of return if an investor holds this stock from period t to period t +1? iii) Now, imagine that at period t +1 investors expect that the economy will be booming leading to higher profitability, which in turn leads to a faster rate of growth of dividends. Assuming that dividends will growth at 9% find the new price of stock. iv) What is the rate of return if an investor holds a stock from period t to t + 1