The Current Yield on Alpha's Common Stock Is 4

question 29

Multiple Choice

The current yield on Alpha's common stock is 4.8%. The company just paid a $2.10 dividend. The speculation is that the dividend will be $2.205 next year. The dividend growth rate is expected to remain constant at the current level. What is the required rate of return on Alpha's stock?

• A) 10.04%
• B) 16.07%
• C) 21.88%
• D) 43.75%
• E) 45.94%