Swamp & Sand's current dividend is $1.6 per share. Analysts expect the firm's growth rate of 2% per year to continue indefinitely. The current stock price is 12.5 . Calculate the required return on equity for this firm.© BrainMass Inc. brainmass.com October 25, 2018, 9:37 am ad1c9bdddf
Shows how to calculate the required rate of return on equity using dividend discount method
CAPM and Cost of Equity
If I have a company whose beta is .54,the present yield to maturity on U.S. government bonds maturing in one year (currently about 4.5% annually) and an assessment that the market risk premium is 6.5%, using the CAPM equation,what is the present cost of equity of my company?
If I have 2 companies, A and B, the beta of A is .50, the beta of B is .23, if I invest 1/3 of my money in each of the stocks of these companies, What will the beta of the portfolio be? If I add my other stock with a beta of .54, what would be the expected rate of return on this portfolio be? Is this 3-stock portfolio well diversified,or does it still have risk that can be diversified away?View Full Posting Details