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Consider four different shares, all of which have a required rate of 20% and a most recent dividend of R4.50 per share. Shares W, X and Y are expected to maintain constant growth rates in dividends for the forseeable future of 10%, 0%, and -5% per year, respectively. Share Z is a growth share that will increase its dividend by 20% for the next 2 years, and then maintain a constant 12% growth rate thereafter.

(a) What is the dividend yield for each of these four shares?

(b) What is the expected capital gains yield?

(c) Discuss the relationship among the various returns that you find for each of these shares?

Business Management, Management Studies

  • Category:- Business Management
  • Reference No.:- M91736770

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