The expected total return on a share of stock minus the total expected dividend yield equals...

The expected total return on a share of stock minus the total expected dividend yield equals the total expected capital gains yield.

True or False

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jeff jeffy answered 2 years ago

What are the total return, expected dividend yield, and capital gains yield for the first year?

ABC Company just paid a dividend (Do) of $1.10. Due to a new product being introduced to the market, ABC expects to achieve a supernormal annual growth rate of 15% for the next four years. After that, growth is expected to return to the long-run constant rate of 8%. Investors require a 12% return on this stock.Question 1 : What are the total return, expected dividend yield, and capital gains yield for the first year?Question 2 : What are the...

The beta on Stock A equals 0.75, and the expected return equals 8.625%. The risk free...

The beta on Stock A equals 0.75, and the expected return equals 8.625%. The risk free rate equals 3%. Calculate the expected return on the market. (Enter percentages as decimals and round to 4 decimals)

The expected return on Natter Corporation’s stock is 18%. The stock’s dividend is expected to grow...

The expected return on Natter Corporation’s stock is 18%. The stock’s dividend is expected to grow at a constant rate of 14%, and it currently sells for $50 a share. Which of the following statements is CORRECT? a. The stock price is expected to be $57 a share one year from now. b. The current dividend per share is $4.00. c.The stock’s dividend yield is 8%. d.The stock’s dividend yield is 7%. e.The stock price is expected to be $54...

A common stock has just payed a dividend of $2.32/share. The dividend is expected to grow...

A common stock has just payed a dividend of $2.32/share. The dividend is expected to grow by 16% for the coming 28 years. After that, the growth rate in dividend is expected to be 4.28% per year in perpetuity. The RRR on the stock is 12.82%. What is the value of the stock today?

A share of stock just recently released a dividend for $1.50 per share, and has expected...

A share of stock just recently released a dividend for $1.50 per share, and has expected growth rate of 4.30% in the next year, 1.60% in the second year, 4.00% in the third year and 4.80% in the fourth year. Finally the firm expects the growth to become 4.50% long-term thereafter. Given that the expected discount rate on these bonds is 24.90%, what is the expected price of this stock? (a) $7.35 (b) $7.59 (c) $8.98 (d) $7.48 Also, are...

A stock is expected to pay a dividend of $1.25 per share in two months and...

A stock is expected to pay a dividend of $1.25 per share in two months and in five months. The stock price is $127, and the risk-free rate of interest is 5% p.a. with continuous compounding for all maturities. An investor has just taken a long position in a six-month forward contract on the stock. a) What are the forward price and the initial value of the forward contract? b) Three months later, the price of the stock is $135...

A stock is expected to pay a dividend of $1.50 per share in three months and...

A stock is expected to pay a dividend of $1.50 per share in three months and in six months. The stock price is $60, and the risk-free rate of interest is 8% per annum with continuous compounding for all maturities. An investor has just taken a short position in a nine-month forward contract on the stock. What are the forward price and the initial value of the forward contract? Three months later, the price of the stock is $55 and...

A stock is expected to pay a dividend of $2 per share in three months. The...

A stock is expected to pay a dividend of $2 per share in three months. The share price is $75, and the risk-free rate of interest is 8% per annum with continuous compounding for all maturities. An investor has just taken a long position in a six-month forward contract on a share of stock. a) What are the forward price and the initial value of the forward contract? b) Three months later, immediately after the payment of the dividend, the...

A stock is expected to pay a dividend of $0.70 per share in one month, in...

A stock is expected to pay a dividend of $0.70 per share in one month, in four months and in seven months. The stock price is $30, and the risk-free rate of interest is 7% per annum with continuous compounding for all maturities. You have just taken a short position in an eight-month forward contract on the stock. Six months later, the price of the stock has become $34 and the risk-free rate of interest is still 7% per annum....

A stock is expected to pay a dividend of $0.50 per share in two month, in...

A stock is expected to pay a dividend of $0.50 per share in two month, in five months and in eight months. The stock price is $20, and the risk-free rate of interest is 5% per annum with continuous compounding for all maturities. You have just taken a short position in a nine-month forward contract on the stock. Seven months later, the price of the stock has become $23 and the risk-free rate of interest is still 5% per annum....

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