Question:5.9 McCliffs has the following parameters related to its stock and firm. Beta Recent Dividend 1.1 1.05 dollars Dividend Growth Rate 4.5 percent Expected return on market 11.0 percent Treasury Bills Yield 4.3 percent 64.00 dollars Most recent stock price What is the cost of equity using DDM? What is the cost of equity using SML?

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The dividend yield (i.e. D1/P0) is a good measure of the expected return on a common stock under which of the following circumstances? g = 0 g > 0 g < 0 g is expected to remain constant over time under no circumstances

The constant growth valuation formula has dividends in the numerator. Dividends are divided by the difference between the required return and dividend growth rate as follows: D1 PO (rs g) Which of the following statements best describes how a change in a firm's stock price would affect a stock's capital gains yield? The capital gains yield on a stock that the investor already owns has a direct relationship with the firm's expected future stock price. The capital gains yield on a stock that the investor already owns has an inverse relationship with the firm's expected future stock price. Walter Utilities is a dividend-paying company and is expected to pay an annual dividend of $2.85 at the end of the year. Its dividend is expected to grow at a constant rate of 6.00% per year. If Walter's stock currently trades for $26.00 per share, what is the expected rate of return? 6.10% 6.77% 16.96% 13.36% Which of the following statements will always hold true? The constant growth valuation formula…

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The formula for calculating the cost of equity capital using the dividend growth model approach is Blank______. (RE denotes the cost of equity, D1 is the next period’s projected dividend, g is the growth rate, and P0 is the current stock price.) Multiple choice question. RE = D1 /(P0 + g) RE = (D1 /P0) /g RE = D1 /P0 + g RE = D1 /P0 – g