Cache Creek Manufacturing Company Is Expected to Pay a Dividend

question 40

Multiple Choice

Cache Creek Manufacturing Company is expected to pay a dividend of $4.20 in the upcoming year. Dividends are expected to grow at the rate of 8% per year. The risk-free rate of return is 4% and the expected return on the market portfolio is 14%. Investors use the CAPM to compute the market capitalisation rate on the shares, and the constant growth DDM to determine the intrinsic value of the shares. The shares are trading in the market today at $84.00. Using the constant growth DDM and the CAPM, the beta of the shares is ________.

• A)1.4
• B)0.9
• C)0.8
• D)0.5

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Definitions:

Oral

Pertaining to the mouth, including aspects related to speaking, eating, or medication administration.

Rectal

Relating to, or situated near the rectum, the final section of the large intestine.

Axillary

Pertaining to the armpit area of the body.

Oral

Related to the mouth; often used in contexts such as oral hygiene, oral medications, or oral communication.