Capital gains versus income

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Capital Gains versus income. Consider 4 different shares, all of which have a required return of 19% and a most recent dividend of $2.40 per share. Shares W, X, and Y are expected to maintain constant growth rates in dividends for the foreseeable future of 8%, 0% and -5% per year, respectively. Share Z is a growth share that will increase its dividend by 20% for the next 2 years and then maintain a constant 12% growth rate thereafter. What is the dividend yield for each of these four shares? What is the expected capital gains yield? Discuss the relationship among the various returns that you find for each of these shares.

Reference no: EM132623260

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