A $40 stock with a 4% dividend yield and an anticipated growth rate of 6%, what is the estimated shareholder expected rate of return if the U.S. T-bill rate is 2%?

Question

Quizplus · Accepted Answer

The expected rate of return for a stock can be estimated using the dividend yield plus the growth rate. In this case, a 4% dividend yield plus a 6% growth rate equals a 10% expected rate of return. The U.S. T-bill rate is not relevant for this calculation.

A $40 Stock with a 4% Dividend Yield and an Anticipated