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Falafel Fineries' common stock is selling for $40 a share. In looking at the stream of dividends
over the past ten years, you find out that the first dividend was $0.60 and the last dividend was
$2.40 What is the stock's expected rate of return?
Solution
Expected rate of return = D1/P0
= 2.4/40
Expected rate of return = 6%

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Falafel Fineries common stock is selling for $40 a share. In lookin.pdf

  • 1. Falafel Fineries' common stock is selling for $40 a share. In looking at the stream of dividends over the past ten years, you find out that the first dividend was $0.60 and the last dividend was $2.40 What is the stock's expected rate of return? Solution Expected rate of return = D1/P0 = 2.4/40 Expected rate of return = 6%