Equilibrium with required return equal to expected return

Assignment Help Financial Management

Reference no: EM131022805

A stock is trading at $80 per share. The stock is expected to have a year-end dividend of $2 per share (D1 = $2), and it is expected to grow at some constant rate g throughout time. The stock's required rate of return is 11% (assume the market is in equilibrium with the required return equal to the expected return). What is your forecast of g? Round the answer to three decimal places.

Reference no: EM131022805

Questions Cloud

Are data consistent with theory of purchasing power parity : In December 2012, you needed 25 percent more pesos to buy one U.S. dollar than you had needed in December 2002. Over the same time period, the consumer price index in Mexico increased 51.1 percent and the consumer price index in the United States ..

Integration into the global economy : What does "integration into the global economy" mean? How might integration into the global economy reduce poverty in India?

Provide discussion related to one specific strength : Provide discussion related to one specific strength and one specific weakness of the process of intellectual assessment. Be sure to provide detailed information to back up your discussion based upon the readings in this unit.

Huge disruptions and change in communities : In a speech, President Barack Obama made the following observations: "I know that for many, the face of globalization is contradictory .... Trade can bring new wealth and opportunities, but also huge disruptions and change in communities.

Equilibrium with required return equal to expected return : A stock is trading at $80 per share. The stock is expected to have a year-end dividend of $2 per share (D1 = $2), and it is expected to grow at some constant rate g throughout time. The stock's required rate of return is 11% (assume the market is in ..

Extent of corruption in a country : The relationship that Raymond Fisman and Edward Miguel found between the extent of corruption in a country and the number of parking violations committed by the country's United Nations delegates in New York isn't perfect.

What volume of solution should student transfer into flask : Some of this solution was transferred to a burett. What volume of solution should the student transfer into a flask

Greatest cause of poverty : An opinion column in the Economist argued: "Globalisation, far from being the greatest cause of poverty, is its only feasible cure." What does globalization have to do with reducing poverty?

What is the present value of an investment : What is the present value of an investment that will pay you $417 at the end of the 1 year, $501 at the end of the 4, and $368 at the end of the 6 year. Assume the discount rate is 8%.

User Account

All Pages