Problem:
An issue of common stock is expected to pay a dividend of $3 at the end of the year. Its growth rate is equal to 3%, and the current share price is $40.
Required:
Question: What is the required rate of return on the stock?
- Between 7% and 10%
- Between 10% and 12%
- Between 12% and 14%
- Between 14% and 17%
Note: Please provide full description.