Consider four different stocks, all of which have a required return of 18 percent and a most recent dividend of $3.60 per share. Stocks W, X, and Y are expected to maintain constant growth rates in dividends for the foreseeable future of 10 percent, O percent, and -6 percent per year, respectively. Stock Z is a growth stock that will increase its dividend by 20 percent for the next two years and then maintain a constant 14 percent growth rate thereafter. What is the dividend yield and capital gains yield for each of these four stocks? (Leave no cells blank - be certain to enter "O" wherever required. A negative answer should be indicated by a minus sign. Do not round intermediate calculations and enter your answers as a percent rounded to 1 decimal place, e.g., 32.1.)
Consider four different stocks, all of which have a required return of 18 percent and a most recent dividend of $3.60 per share. Stocks W, X, and Y are expected to maintain constant growth rates in dividends for the foreseeable future of 10 percent, O percent, and -6 percent per year, respectively. Stock Z is a growth stock that will increase its dividend by 20 percent for the next two years and then maintain a constant 14 percent growth rate thereafter. What is the dividend yield and capital gains yield for each of these four stocks? (Leave no cells blank - be certain to enter "O" wherever required. A negative answer should be indicated by a minus sign. Do not round intermediate calculations and enter your answers as a percent rounded to 1 decimal place, e.g., 32.1.)
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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Transcribed Image Text:Consider four different stocks, all of which have a required return of 18 percent and a
most recent dividend of $3.60 per share. Stocks W, X, and Y are expected to maintain
constant growth rates in dividends for the foreseeable future of 10 percent, O percent,
and -6 percent per year, respectively. Stock Z is a growth stock that will increase its
dividend by 20 percent for the next two years and then maintain a constant 14 percent
growth rate thereafter. What is the dividend yield and capital gains yield for each of
these four stocks? (Leave no cells blank - be certain to enter "O" wherever required. A
negative answer should be indicated by a minus sign. Do not round intermediate
calculations and enter your answers as a percent rounded to 1 decimal place, e.g.,
32.1.)
Dividend yield
Capital gains yield
Stock W
%
Stock W
%
Stock X
%
Stock X
%
Stock Y
%
Stock Y
%
Stock Z
%
Stock Z
%
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