11. You observe that the stock of MMM, Inc. has just paid a dividend $3.15. You expect the future dividends to grow at a
Posted: Fri Jul 01, 2022 7:43 am
- 11 You Observe That The Stock Of Mmm Inc Has Just Paid A Dividend 3 15 You Expect The Future Dividends To Grow At A 1 (44.22 KiB) Viewed 29 times
11. You observe that the stock of MMM, Inc. has just paid a dividend $3.15. You expect the future dividends to grow at a constant growth rate of 4.35% per year forever. If the market is using a discount rate of 13%, which of the following statements are true? 1. ii. iii. iv. The stock price today is $38.00. The expected stock price two years from now is $41.38. The capital gains yield is the difference between the discount rate and growth rate and is equal to 12%. An investor holding the stock will earn a discount rate of 13% and a growth rate of 4.35% giving a total expected return of 13% +4.35% = 17.35%. i, ii, and iii a. b. i only ii and iv C. d. i and ii e. All statements are true