Risk Metrics Company Is Expected to Pay a Dividend of $3.50

Risk Metrics Company is expected to pay a dividend of $3.50 in the coming year.Dividends are expected to grow at a rate of 10% per year.The risk-free rate of return is 5%, and the expected return on the market portfolio is 13%.The stock is trading in the market today at a price of $90.00. What is the market-capitalization rate for Risk Metrics?

A) 13.6%
B) 13.9%
C) 15.6%
D) 16.9%

Correct Answer:

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