The Current Yield on Alpha's Common Stock Is 5

question 40

Multiple Choice

The current yield on Alpha's common stock is 5.2%. The company just paid a $2.10 dividend. The rumor is that the dividend will be $2.3 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) 10.70%
• B) 12.31%
• C) 18.29%
• D) 20.01%
• E) 24.21%

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