Fight Finance

Courses  Tags  Random  All  Recent  Scores

Scores
keithphw$5,541.61
DanielDng$2,340.70
Visitor$830.00
Visitor$610.00
Visitor$240.00
Visitor$223.09
Visitor$210.00
Visitor$170.00
Visitor$130.00
Visitor$120.00
Visitor$120.00
Visitor$110.00
Visitor$90.00
Visitor$80.00
Visitor$66.43
Visitor$63.09
Visitor$60.00
Visitor$52.91
Visitor$50.00
Visitor$50.00
 

Question 228  DDM, NPV, risk, market efficiency

A very low-risk stock just paid its semi-annual dividend of $0.14, as it has for the last 5 years. You conservatively estimate that from now on the dividend will fall at a rate of 1% every 6 months.

If the stock currently sells for $3 per share, what must be its required total return as an effective annual rate?

If risk free government bonds are trading at a yield of 4% pa, given as an effective annual rate, would you consider buying or selling the stock?

The stock's required total return is:




Copyright © 2014 Keith Woodward