If investors expect a 14% return on a $50 stock thatpays a dividend of $2.50, what is the impliedcapital gain rate?

1. Calculate the Dividend Yield:Dividend Yield = (Annual Dividend / Stock Price) * 100Dividend Yield…

Answered: If investors expect a 14% return on a…

Corporate Fin Focused Approach

5th Edition

ISBN:9781285660516

Author:EHRHARDT

Publisher:EHRHARDT

Chapter7: Valuation Of Stocks And Corporations

Section7.4: Valuing Common Stocks

Problem 3ST

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What is the implied capital gain rate ??
What is the implied capital gain rate ?? General accounting
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Given the constant growth dividend valuation model, the expected percentage growth in vau of a stock is equal to the capital gains yield for that stock. Select one: O True O False Previous page Next page Return ti: General
The required return on a stock is equal to which one of the following if the dividend on the stock decreases by a constant percent per year? O Dividend yield - Capital gains yield O (PO/D1) - g O (D1/PO)/g Dividend yield x Capital gains yield O Dividend yield + Capital gains yield
(13) If D1 = $3.00, g = 7%, and P0 = $44, what is the stock’s expected dividend yield, capital gains yield, and total expected return for the coming year?
You are considering the purchase of preferred stock that is currently selling for $57.25 and promises an annual dividend of $4.50 dividends. What is the implied return on this investment? O 7.86% O 12.72% O 8.30% O 9.61% 11.35%
None
A stock sells for $ 49.14 . The next dividend will be $ 2.58 per share. If the expected return is 15 %, what must be the expected growth of the stock?
1. (a) What are the two components of most stocks’ expected total return?(b) How does one calculate the capital gains yield and the dividend yield of a stock?(c) If D1 = RM3.00, P0 = RM50, and the expected P at t=1 is equal to RM52, what are the stock’s expected dividend yield, capital gains yield, and total return for the coming year?2. (a) Are stock prices affected more by long-term or short-term performance? Explain.(b) A stock is expected to pay a dividend of RM2 at the end of the year. The required rate of return is rs = 12%. What would the stock’s price be if the growth rate were 4%?What would the stock’s price be if the growth rate were 0%?3. If D0 = RM4.00, rs = 9%, and g = 5% for a constant growth stock, what are the stock’s expected dividend yield and capital gains yield for the coming year?4. (a) Explain what is meant by the terms “horizon (terminal) date” and “horizon (terminal) value”.(b)Suppose D0 = RM5.00 and rs = 10%. The expected growth rate from Year 0 to Year 1 (g0…
If Do= $2.25, g (which is constant) = 3.5%, and Po= $44, what is the stock's expected dividend yield for the coming year? Select the correct answer. Oa. 4.15% b. 4.53% O c. 5.29% d. 4.91% O e. 5.67%

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If investors expect a 14% return on a $50 stock that pays a dividend of $2.50, what is the implied capital gain rate?