2) Company CDE’s common stock is currently traded at $40 a share. It is expected to distribute a dividend of $2 a share

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2) Company CDE’s common stock is currently traded at $40 a share. It is expected to distribute a dividend of $2 a share

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2) Company CDE’s common stock is currently traded at $40 ashare. It is expected to distribute a dividend of $2 a share nextyear. The average yield to maturity of bonds issued by CDE is 8%.Assume that the CDE’s common stock has a risk premium of 4%relative to its yields. What is the implied growth rate ofdividends expected by market investors?
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