Data for a share of common stock of ABC Company appear below:
Dividend: 2005 actual $ 1.000
2006 actual 1.100
2007 actual 1.210
2008 expected 1.331
Current market price per share: $20.000
Assuming the dividend pattern above will continue in the future and also assuming that it is the first of January,2008,the estimated current return for the stock is

Question

Quizplus · Accepted Answer

The estimated current return for the stock is calculated by dividing the expected dividend for 2008 by the current market price per share. The expected dividend for 2008 is $1.331 and the current market price per share is $20.000. Therefore, the estimated current return is $1.331 / $20.000 = 0.06655 or 6.67%.

Data for a Share of Common Stock of ABC Company