Block stock sells for $31 per share. It just paid a dividend of $1.14 per share. Thecompany has a growth rate of 4% annually. The return of market is 6%. T - billshave a rate of 2.5%. The bond - yield risk premium is 4%. Block's beta is 1.17.What is the cost of equity for Block?

The cost of equity is the required rate of return based on the expectation of shareholders based on…

Block stock sells for $31 per share. It just paid a dividend of $1.14 per share. The company has a growth rate of 4% annually. The return of market is 6%. T - bill have a rate of 2.5%. The bond - yield risk premium is 4%. Block's beta is 1.17 What is the cost of equity for Block?

Block stock sells for $31 per share. It just paid a dividend of $1.14 per share. The company has a growth rate of 4% annually. The return of market is 6%. T - bill have a rate of 2.5%. The bond - yield risk premium is 4%. Block's beta is 1.17 What is the cost of equity for Block?

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Concept explainers

Treasury Market

On-the-run securities are the most recently issued securities in the market depth and are therefore traded at some premium. The off-the-run securities are the ones issued just before the most recent ones. The on-the-run securities have a lower yield to the investor than the off-the-run securities.

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Block stock sells for $31 per share. It just paid a dividend of $1.14 per share. The
company has a growth rate of 4% annually. The return of market is 6%. T - bills
have a rate of 2.5%. The bond - yield risk premium is 4%. Block's beta is 1.17.
What is the cost of equity for Block?

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