An issue of common stock is expected to pay a dividend of $4.0 at the end of the year. Its growth rate is equal to 3%, and the current share price is $40. What is the required rate of return on the stock?
A. between 7% and 10%
B. between 10% and 12%
C. between 12% and 14%
D. between 14% and 17%
Answer:C
An issue of common stock is expected to pay a dividend of $4.0 at the end of the year. Its growth rate is equal to 3%, and the current share price is $40. What is the required rate of return on the stock?
A. between 7% and 10% B. between 10% and 12% C. between 12% and 14% D. between 14% and 17%