Lucus Laboratories' last dividend was $1.50. Its current equilibriuem st- expected to grow at a constant 5 percent. If the stockholders' required what is the expected dividend yield and expected capital gains yield for

Financial Management: Theory & Practice
16th Edition
ISBN:9781337909730
Author:Brigham
Publisher:Brigham
Chapter7: Corporate Valuation And Stock Valuation
Section: Chapter Questions
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Lucus Laboratories' last dividend was $1.50. Its current equilibriuem stock price is $15.75 and is
expected to grow at a constant 5 percent. If the stockholders' required rate of return is 15 percent,
what is the expected dividend yield and expected capital gains yield for the coming year?
Select one:
a. Expected dividend yield 15%; Expected capital gains yield 0%
b. Expected divided yield 10%; Expected capital gains yield 5%
c. Expected dividend yields 5%: Expected capital gains yield 10%
d. Expected dividend yield 10%; Expected capital gains yield 15%
Transcribed Image Text:Lucus Laboratories' last dividend was $1.50. Its current equilibriuem stock price is $15.75 and is expected to grow at a constant 5 percent. If the stockholders' required rate of return is 15 percent, what is the expected dividend yield and expected capital gains yield for the coming year? Select one: a. Expected dividend yield 15%; Expected capital gains yield 0% b. Expected divided yield 10%; Expected capital gains yield 5% c. Expected dividend yields 5%: Expected capital gains yield 10% d. Expected dividend yield 10%; Expected capital gains yield 15%
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