1. Based on the following information about GEN common stock,
Last dividend per share: $5
Dividend growth rate: 3%
Required rate of return: 15%
What is the expected price in 3 years, E(P3)?
a. $44.86
b. $47.20
c. $45.21
d. $46.13
e. $46.90
2. Based on the following data for AAA stock, what is the implied market risk premium?
Dividend just paid, D0 =$4
10-year Treasury bond yield=6%
Beta for the stock=1.5
Current market price, P0=$125.71
Constant dividend growth rate=10%
Assume that the stock is priced in equilibrium.
a. 6.33%
b. 5.96%
c. 4.12%
d. 5.00%