The price of stock DQTL is ￥6.90 and the most recent dividend paid by DQTL is ￥0.48. The analysts predict that the dividend in the next year will be ￥0.55. But in the long term, the expected constant growth rate in dividends is 3% annually. If you believe that the stock price in the real world should fluctuate around the price determined under the Gordon Growth Model and you are looking for an investment opportunity with an annual return rate of 7%, will you decide to buy the stock DQTL or not? (1’) Why? (3’) If one of your friends who also believe in the Gordon Growth Model decides to buy this stock, please estimate his required return on this investment. (3’)

Answer rating: 100% (QA)

The Gordon Growth Model states that the stock price can be estimated by dividing the expected future ... View the full answer