Risk Metrics Company is expected to pay a dividend of $3.50 in the coming year. Dividends are expected to grow at a rate of 10% per year. The risk-free rate of return is 5%, and the expected return on the market portfolio is 13%. The stock is trading in the market today at a price of $90.00. What is the market-capitalization rate for Risk Metrics?
A) 13.6%
B) 13.9%
C) 15.6%
D) 16.9%
E) None of the options are correct.

Question

Quizplus · Accepted Answer

The Answer of Risk Metrics Company is expected to pay a dividend of $3.50 in the coming year. Dividends are expected to grow at a rate of 10% per year. The risk-free rate of return is 5%, and the expected return on the market portfolio is 13%. The stock is trading in the market today at a price of $90.00. What is the market-capitalization rate for Risk Metrics?
A) 13.6%
B) 13.9%
C) 15.6%
D) 16.9%
E) None of the options are correct.

Risk Metrics Company Is Expected to Pay a Dividend of $3.50