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Assume that the stock is priced in equilibrium

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Reference no: EM131974979

1. Based on the following information about GEN common stock,

Last dividend per share: $5

Dividend growth rate: 3%

Required rate of return: 15%

What is the expected price in 3 years, E(P3)?

a. $44.86

b. $47.20

c. $45.21

d. $46.13

e. $46.90

2. Based on the following data for AAA stock, what is the implied market risk premium?

Dividend just paid, D0 =$4

10-year Treasury bond yield=6%

Beta for the stock=1.5

Current market price, P0=$125.71

Constant dividend growth rate=10%

Assume that the stock is priced in equilibrium.

a. 6.33%

b. 5.96%

c. 4.12%

d. 5.00%

Reference no: EM131974979

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