Then the risk premium on stock may be zero

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If Professor Siegel is correct that stocks are less risky than bonds, then the risk premium on stock may be zero. Assuming that the risk-free interest rate is 3 percent, the growth rate of dividends is 2.5 percent and the current level of dividends is $15, use the dividend-discount model to compute the level of the S&P 500 that is warranted by the fundamentals.

Instructions: Enter your response rounded to the nearest penny (two decimal places).

The level of the S&P 500: $___

Reference no: EM131873516

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