Scan QR code or get instant email to install app
Question:
The value per share is closest to:
A
$14.39.
explanation
1212
Using the CAPM, the required rate of return 
= 9.20% + 1.4(14.0% − 9.2%) = 9.20% +6.72% = 15.92%
The retention ratio (RR) = 1 − dividend payout ratio = 1 − 0.30 = 0.70
The growth rate (
) = (RR)(ROE) = (0.70)(10%) = 7.00%
(dividend payout) = 4.00(0.30) = 1.20
Next year's dividend 
= 1.20(1 + 0.07) = 1.284
Take more free practice tests for other PASSEMALL topics with our cfa practice questions now!
Related Information
Comments