Solutions to Chapter 1

The stock price today can still reflect the present value of the expected per share stream of dividends. 2. Dividend yield = Dividend/Price = DIV1/P0. 0.08 = 2.40/P0 ( P0 = $30. 3. The preferred stock pays a level perpetuity of dividends. ... 10. In 2007, the Dow was substantially more than four times its 1990 level. Therefore, in 2007, a 40 ... ................
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