Reference no: EM13184911
Pick any retail stock that offers a dividend and has existed for at least 5 years.
a) What is the Beta of the stock?
b) What is the YTD stock market return?
c) What is the capitalization, k, of teh stock?
d) Compute the growth rate of the dividend, g. (You can either compute the ROE*plowback ratio or compute the annual growth rate of dividends)
e) Based on this information, what should the price of the stock be today using the constant-growth dividend discount model?
f) What is the actual price of the stock on the market?
g) Do you think the constant dividend discount model is a good model to use for this stock? Why or why not?
h) What is the P/E ratio? How does it compare to g?
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