Answered: A share has expected dividend stream of…

A share has expected dividend stream of 10, 20 40 and then 0 from then on (bankruptcy). Its current price is 50. What is its required efficient marrket hypothesis rate of return?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

A share has expected dividend stream of 10, 20 40 and then 0 from then on (bankruptcy). Its current price is 50. What is its required efficient marrket hypothesis rate of return?

Definition Definition Percentage gain or loss from a specific investment over time. The rate of return is the difference between the closing and initial values of an investment divided by the initial value of the investment. The closing value includes any intermediate cash flows such as dividends or interest amounts.

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