Now you are going to include some examples, including:
a. a stock has a beta coefficient of 1.8, the risk-free rate is 5%, and the required return on the market is 9%. What would be the required return on the stock?
b. a stock that is constant growth whose last dividend (paid yesterday) was $1.50 and whose dividend is expected to grow indefinitely at 4%:
-what would be the expected dividend stream over the next 3 years?
-what is the firm’s current stock price?
-what is the stock’s expected value one year from now?
-what are the expected dividend yield, capital gains yield, and total return during the first year?