Markets expectation of the growth rate of MBI dividends

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Reference no: EM13880782

A) Computer stocks currently provide an expected rate of return of 14%. MBI, a large computer company, will pay a year-end dividend of $1 per share. If the stock is selling at $50 per share, what must be the market's expectation of the growth rate of MBI dividends? B) If dividend growth forecasts for MBI are revised downward to 4% per year, what will be the price of the MBI stock? C) What (qualitatively) will happen to the company's price–earnings ratio?

Reference no: EM13880782

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