The Current Yield on Alpha's Common Stock Is 4

question 3

Multiple Choice

The current yield on Alpha's common stock is 4.8%. The company just paid a $2.10 dividend. The rumor 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%

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Definitions:

Water Molecule

the smallest unit of water (H2O), consisting of two hydrogen atoms bonded to one oxygen atom.

Electron Shells

Regions around an atom's nucleus where electrons are likely to be found, each shell having a fixed capacity for electrons.

Magnesium

a lightweight, silvery-white metallic element that is essential for both plant and animal life.

Neutrons

Neutral particles found in the nucleus of an atom, with no electric charge.