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a) Caterpillar Inc. (CAT) stock currently (2015) pays $0.77 per share quarterly dividend (the dividend was $0.42 per share in 2008). Assuming constant growth, what is the growth rate on the CAT stock dividend?

b) Find the beta for CAT stock, and the current interest rate on 6-month T-bill.

c) For the past 5 years, the Dow Jones Industrial Average went from 12,380.05 to 17,576.96. Assume it represents the expected return for the market portfolio, calculated the expected return for CAT stock based on CAPM?

d) Based the closing price of CAT stock on 4/08/16, what is the yield of CAT stock? Is this stock over-priced or underpriced?

Financial Management, Finance

  • Category:- Financial Management
  • Reference No.:- M91791506

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