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Determining the dividend pricing model

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Dividend Pricing Model

A. Based on the 2014 dividends, what price would you be willing to pay forAnnaly Capital Mgmt. Co. (NLY)if you require a return (k) of 8%? Assume a decision date of January 3, 2015.

B. What is the actual one year return based on the December 30, 2014 price of the stock?

C. Why would you decide to buy or not buy NLY on January 3, 2015?

D. Suppose NLY decided to reduce dividends by 6% annually. Would you reconsider you decision in part "C"? Why or why not?

Show your sources, your work and explain why you chose the formulas used.

Reference no: EM131388253

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