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: