Question

An ordinary share just paid a dividend of $2 today. It is expected that the share will pay annual dividends at a growth rate of 3% p.a. forever. George buys the share today for $25. He plans to sell the share in 12 months immediately after he gets the dividend. Which of the following can be used to find the rate of return for George (There is only one correct answer)? (2 marks) $2^(1.03)/25+0.03$ $02/25+0.03$ $02/25$ Onone of the options can be used to find the rate of return. $02^(1.03)/25$ Which of the following can be used to calculate the return on income for George during the 12 month holding period (There is only one correct answer)? (2 marks) Onone of the options can be used to find the return on income. $02^(1.03)/25$ $02/25+0.03$ $02/25$ $02^(1.03)/25+0.03$

          An ordinary share just paid a dividend of $2 today. It is expected that the share will pay annual dividends
at a growth rate of 3% p.a. forever. George buys the share today for $25. He plans to sell the share in 12
months immediately after he gets the dividend. Which of the following can be used to find the rate of
return for George (There is only one correct answer)? (2 marks)
$2^*(1.03)/25+0.03$
$02/25+0.03$
$02/25$
Onone of the options can be used to find the rate of return.
$02^*(1.03)/25$
Which of the following can be used to calculate the return on income for George during the 12 month
holding period (There is only one correct answer)? (2 marks)
Onone of the options can be used to find the return on income.
$02^*(1.03)/25$
$02/25+0.03$
$02/25$
$02^*(1.03)/25+0.03$

An ordinary share just paid a dividend of 2 today. It is expected that the share will pay annual dividends
at a growth rate of 3% p.a. forever. George buys the share today for $25. He plans to sell the share in 12
months immediately after he gets the dividend. Which of the following can be used to find the rate of
return for George (There is only one correct answer)? (2 marks)2^*(1.03)/25+0.0302/25+0.0302/25Onone of the options can be used to find the rate of return.02^*(1.03)/25Which of the following can be used to calculate the return on income for George during the 12 month
holding period (There is only one correct answer)? (2 marks)
Onone of the options can be used to find the return on income.02^*(1.03)/2502/25+0.0302/2502^*(1.03)/25+0.03

Added by Christopher P.

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