a. Suppose you know that a company’s stock currently sells for GH¢60 per share and the required return on the stock is 1
Posted: Wed May 18, 2022 9:32 pm
a. Suppose you know that a company’s stock currently sells for
GH¢60 per share and the required return on the stock is 16 percent.
You also know that the total return on the stock is evenly divided
between a capital gains yield and a dividend yield. If it’s the
company’s policy to always maintain a constant growth rate in its
dividends, what is the current dividend per share?
b. Shaq, Inc., has an issue of preferred stock outstanding that
pays a GH¢9.50 dividend every year, in perpetuity. If this issue
currently sells for GH¢85 per share, what is the required
return?
GH¢60 per share and the required return on the stock is 16 percent.
You also know that the total return on the stock is evenly divided
between a capital gains yield and a dividend yield. If it’s the
company’s policy to always maintain a constant growth rate in its
dividends, what is the current dividend per share?
b. Shaq, Inc., has an issue of preferred stock outstanding that
pays a GH¢9.50 dividend every year, in perpetuity. If this issue
currently sells for GH¢85 per share, what is the required
return?