What is the expected dividend per share of stock

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The required return on the market portfolio is 12 percent. The beta ofstock X is 2.0. The required return on the stock is 18 percent. The expected dividend growth on stock X is 5 percent. The price per share of stock X is Rs.30. What is the expected dividend per share of stock X next year? What will be the combined effect of the following on the price per share of stock X?

(a) The inflation premium increases by 2 percent.

(b) The decrease in the degree of risk-aversion reduces the differential between the return on market portfolio and the risk-free return by one-third.

(c) The expected growth rate of dividend on stock X decrease to 4 percent.

(d) The beta of stock X falls tol.8.

Reference no: EM133001180

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