Hij Is Currently Selling For 10 Per Share The Security Is Eligible For 50 Margin


You expect that Trader Moe’s and Buyer Sam’s will continue with the same dividend pattern moving forward. For Seller Bob’s you expect it to increase its dividend by a constant 8% starting in year 4.

The current stock price for each stock is as follows:

Trader Moe’s – $15.00

Buyer Sam’s – $38.00

Seller Bob’s – $28.00

If you require 15% return on your investments, which stock would you prefer to buy and why? (Hint: use the dividend discount model and compare this value to the share prices above)

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