Question

What is the implied required return on a stock priced at 146.00 with a constant 5.90 annual dividend?

1) 4.04
2) 24.75
3) 17.81

Answer 1

The implied required return on a stock priced at $146.00 with a constant $5.90 annual dividend is 4.04%. option 1.

Step-by-step explanation:

To calculate the implied required return on a stock, we can use the dividend discount model (DDM). The DDM calculates the present value of all future dividends to determine the required return. In this case, we have an annual dividend of $5.90 and a stock price of $146.00. To calculate the implied required return, we divide the annual dividend by the stock price:

$5.90 / $146.00 = 0.0404 = 4.04%

The implied required return on this stock is 4.04%.