A company will pay a $2 per share dividend in 1 year. The dividend in 2 years will be $4 per share, and it is expected that dividends will grow at %5 per year thereafter. The expected rate of return on the stock is 12%.
a) What is the expected price of the stock in a year?
b) Show that the expected return, 12%, equals dividend yield plus capital appreciation.
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A company will pay a $2 per share dividend in 1 year. The dividend in 2 years will be $4 per share,...
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