Shares of common stock of the Samson Co. offer an expected total return of 15.8

Question

Shares of common stock of the Samson Co. offer an expected total return of 15.8 percent. The dividend is increasing at a constant 5.0 percent per year. The dividend yield must be:

20.80 percent.

5.00 percent.

3.16 percent.

10.80 percent.

15.80 percent.

Shares of common stock of the Samson Co. offer an expected total return of 15.8 percent. The dividend is increasing at a constant 5.0 percent per year. The dividend yield must be:

20.80 percent.

5.00 percent.

3.16 percent.

10.80 percent.

15.80 percent.

Explanation / Answer

10.80 percent. ke = D1/P0 + g 15.8% = D1/P0 + 5% D1/P0 = 15.8% - 5% Dividend Yield = 10.8%

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