1. Which one of the following will decrease the current value of a stock?
Increase in the expected dividend for next year
Decrease in the dividend growth rate
All answers are wrong
Decrease in the required return
Increase in the capital gains yield
2. Atlas Home Supply has paid a constant annual dividend of $2.40 a share for the past 15 years. Yesterday, the firm announced the dividend will increase next year by 10 percent and will stay at the level through year 3, after which time the dividends will increase by 2 percent annually. The required return on this stock is 11.8 percent. What is the current value per share?
$26.84
$26.02
$26.08
$25.51
$24.57