Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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Term
Horizon value
Current intrinsic value
Value
If investors expect a total return of 12.60%, what will be Goodwin's expected dividend and capital gains yield in two years-that is, the year before
the firm begins paying dividends? Again, remember to carry out the dividend values to four decimal places. (Hint: You are at year 2, and the first
dividend is expected to be paid at the end of the year. Find DY, and CGY,.)
$26.55
$19.03
Expected dividend yield (DY)
Expected capital gains yield (CGY,)
Goodwin has been very successful, but it hasn't paid a dividend yet. It circulates a report to its key investors containing the following statement:
No
Goodwin's investment opportunities are poor.
Yes
9.20%
4.29%
Is this statement a possible explanation for why the firm hasn't paid a dividend yet?
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Transcribed Image Text:Term Horizon value Current intrinsic value Value If investors expect a total return of 12.60%, what will be Goodwin's expected dividend and capital gains yield in two years-that is, the year before the firm begins paying dividends? Again, remember to carry out the dividend values to four decimal places. (Hint: You are at year 2, and the first dividend is expected to be paid at the end of the year. Find DY, and CGY,.) $26.55 $19.03 Expected dividend yield (DY) Expected capital gains yield (CGY,) Goodwin has been very successful, but it hasn't paid a dividend yet. It circulates a report to its key investors containing the following statement: No Goodwin's investment opportunities are poor. Yes 9.20% 4.29% Is this statement a possible explanation for why the firm hasn't paid a dividend yet?
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