Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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Chapter 13, Problem 17PS

a. Computer stocks currently provide an expected rate of return of 16 % . MBI, a large computer company, will pay at year-end dividend of $ 2 per share. If the stock is selling at $ 5 0 per share, what must be the market’s expectation of the growth rate of MEI dividends?
b. If dividend growth Forecasts for MBI are revised downward to 5 % per year, what will happen to the price of MBI stock?
c. What (qualitatively) will happen to the company’s price-earnings ratio? LO 13 3

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Essentials Of Investments

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