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What is the required return on stock

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Reference no: EM132726286

You are considering the purchase of a stock that just paid a dividend of $3. Its dividends are expected to grow at 4% in perpetuity.

The stock has a beta of 1.3, the risk-free rate is 3% and the return on an average stock in the market is 9%.

a. What is the required return on this stock?

b. What should you pay for a share of this stock?

c. What is the capital gains yield on this stock?

d. What is the dividend yield on this stock?

Reference no: EM132726286

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