Stock X is expected to pay a dividend of $3.00 at the end of the year. The dividend is expected to grow at a constant rate of 6% a year. The stock currently trades at a price of $50 a share. Assume that the stock is in equilibrium. Which of the following statements is most correct?
a. The required return on the stock is 12%.
b. The stock's expected capital gains yield is 6%.
c. The stock's dividend yield is 0%.
Statements a and b are correct.
All of the statements above are correct.