Hey,
Can anyone confirm that a stock"s capitalization rate is the same as the required return?
If a question gives us the dividend growth rate as 8%, the dividend in the upcoming year as 3.2$, the risk free rate of 3% and the expected return on the market portfolio is 11% and the stock’s current price is 72$, what is the stock’s capitalization rate?
So P0=D1/(k-g), 72=3.2/(k-0.08), k=12.44%.
Do you have the same capitalization rate as I do?
Thx!