Find the capital gain yield during the first year

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Consider a stock that will pay $2 dividends per year for 10 years (from t=1 till t=10) after which the dividends are expect to increase with the constant growth rate of 3% per year (so, at=11 the dividend will be 2*1.03=$2.06, at t=12 it will be 2.06*1.03, etc. ) and the required return on stock is 11%

a) Find the capital gain yield during the first year:

b) Find the dividend yield during the 15th year

Reference no: EM132497978

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