Given the following information for the stock of Foster​ Company, calculate the risk premium on its common stock.     Current price per share of common stock ​$40.91 Expected dividend per share next year ​$3.12 Constant annual dividend growth rate 6.2​% ​Risk-free rate of return 7.9​%     The risk premium on Foster stock is ____% ​(Round to two decimal​ places.)

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
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and Valuation   Given the following information for the stock of Foster​ Company, calculate the risk premium on its common stock.

 

 

Current price per share of common stock

​$40.91

Expected dividend per share next year

​$3.12

Constant annual dividend growth rate

6.2​%

​Risk-free rate of return

7.9​%

 

 

The risk premium on Foster stock is ____% ​(Round to two decimal​ places.)

 

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