Unformatted text preview: of its earnings as dividends, and it has a historical ROE of 12%. Assume the market expects a 10% return from investing in XYZ stock. (a) What is XYZ’s expected growth rate in dividends? (b) What is XYZ’s current share price (Assuming the DDM)? (c) The CEO of XYZ believes the stock should have a current P/E ratio of 20. What dividend policy should achieve this?...
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- Spring '08
- Dividend, P/E ratio, PEG ratio