You will analyze three different stocks, all of which have a required return of 20% and a most recent dividend of $3.50 per share. Stocks A, B, and C are expected to maintain constant growth rates in dividends for the foreseeable future of 12%, 0%, and -6% per year respectively.
A] What is the dividend yield for each of these three stocks?
B] What is the expected capital gains yield?
C] What is the price of each stock?
D] Discuss the relationship among the various returns that you find for each of these stocks.