What is the value of share of stock

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Reference no: EM132008241

Suppose that you are interested in buying the stock of a company that has a policy of paying a $5 per share dividend every year. Assuming no changes in the firm’s policies, what is the value of a share of stock if the required rate of return is 10 percent?

Assume that JNJ stock is priced at $101 per share and pays a dividend of $3 per share. An investor purchases the stock on margin, paying $80 per share and borrowing the remainder from the brokerage firm at 10 percent annualized interest. If after one year, the stock is sold at a price of $117 per share, what is the return to the investors?

Reference no: EM132008241

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