CHAPTER 6: COMMON SHARES: CHARACTERISTICS AND VALUATION

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Short Answer
	1.	Common shares of Chima Juice are expected to trade for $8.00 in one year. The company pays an annual dividend of $0.20. The next dividend will be paid in one year. If the shares currently trade at $7.50, what is the expected return on the shares?
	2.	Gold Digging Corp is expected to increase its annual dividend by 5%. An annual dividend of $0.22 has just been paid to shareholders. Assuming a required return rate of 11%, what should the current share price be?
	3.	An analyst estimates that Mountain Mercantile will issue the following dividends: $0.25 in one year, $0.35 in two years, $0.35 in three years, and $0.45 in four years. The current price of the shares is $8.75. Based upon a return of 10%, what will be the price in four years?