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Homework answers / question archive / A firm's common stock currently sells for $50 per share

A firm's common stock currently sells for $50 per share. The firm recently paid a dividend of $2 per share on its common stock, and investors expect the dividend to grow indefinitely at a constant rate of 5.5% per year. What's the firm's cost of common stock using DCF approach?

9.9%

9.5%

15.5%

10.5%

Using the information from Question 48, find the stock's capital gain yield.

3.00%

4.19%

4.81%

5.0%

A stock has the following probability distribution: If economy is good (the probability is 0.2), its expected stock return is 25%; if economy is on average (the probability is 0.6), its expected stock return is 8%; if economy is bad (the probability is 0.2), its expected return is -15%. Find the expected rate of return for the stock

5.2%

6.0%

6.8%

8.5%

Using the data from the previous question, find the standard deviation (risk) for the stock

11.06%

12.23%

13.56%

13.90%

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