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Last year the market return is 9%, and risk-free rate is 1%. AAA company's stock is computed

Last year the market return is 9%, and risk-free rate is 1%. AAA company's stock is computed to have a beta of 1.5. Now you know that AAA company's stock dividend is scheduled as following: first year 1 dollar, second year 1.4 dollars, and third year 1.8 dollars. Starting from the fourth year the stock will pay 2 dollars per share dividend forever. In this case, how much would you be willing to pay for the stock today? A. $11.23 B. $12.67 (1.13 6.132 (1.133 @ $13.88 D. $16.56 4 1 .4 1.8 rarft & Crm-rt) . na-0.01) = 0.01+ 1.5(0.09-0.01)

Feb 08 2020 View more View Less

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