What growth rate in dividends must be expected

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Reference no: EM132046904

1. You are bidding on a contract and if you are successful bidder the customer will owe you £100,000 payable on February 5th which of the following would be the best instrument to use in hedging this payment.

A. Forward contract

B. Money Market Hedge

C. Futurs contract

D. Options contract

2. The XYZ Company, whose common stock is currently selling for $40 per share, is expected to pay a $2.00 divident in the coming year. If investors believe that the expected rate of return on XYZ is 14%, what growth rate in dividends must be expected (please show your calcuation)

a. 5%

b. 14%

c. 9%

d. 6%

Reference no: EM132046904

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