# Expected and Required Returns

An investment of $20 in Stock A is expected to pay no dividends and have value of $24 in 1 year. An investment of $70 in Stock B is expected to generate a $2.50 dividend next year and price of its stock is expected to be $78.

1) What are the expected returns

2) If the required return is 10%, which

stock(s) should be profitable investments?

https://brainmass.com/business/beta-and-required-return-of-a-project/expected-and-required-returns-10678

#### Solution Preview

1) Stock A

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Expected returns = (24 - 20)/20

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#### Solution Summary

Expected and Required Returns are examined.

$2.19