You wish to earn a return of 13% on each of two stocks, X and Y. Stock X is expected to pay a dividend of Rs. 3 in the upcoming year while Stock Y is expected to pay a dividend of Rs. 4 in the upcoming year. The expected growth rate of dividends for both stocks is 7%. The intrinsic value of stock X:

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Question:
You wish to earn a return of 13% on each of two stocks, X and Y. Stock X is expected to pay a dividend of Rs. 3 in the upcoming year while Stock Y is expected to pay a dividend of Rs. 4 in the upcoming year. The expected growth rate of dividends for both stocks is 7%. The intrinsic value of stock X:

1.Will be greater than the intrinsic value of stock Y

2.Will be the same as the intrinsic value of stock Y

3.Will be less than the intrinsic value of stock Y

4.Cannot be calculated without knowing the market rate of return

Posted Date:-2021-10-27 14:21:43

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