|Author||Topic: CFAI got it wrong on this question, or did I miss something?|
|Reading 56 (P152 question 4).
The question says "Over the long-run, you expect dividends for BBC in Problem 2 above to grow at 8% and u require 11% . . . .
In 2 the dividends was correctly calculated as (1) last year to be $6 and (2) this year to be $6.6, if the required rate has been changed to 11% why is the solution for D1$6*1.08/0.03 instead of $6.6*1.08/0.03.
My solution was $237,6. Did I miss something in the question or the solution.
|I agree with you. I believe it's 6.6*1.08 on top, since you use the dividend for the period after the current one for the Gordon Growth Model.|
CFA Discussion Topic: CFAI got it wrong on this question, or did I miss something?
I am happy to say that I passed! Your study notes certainly helped prepare me for what was the most difficult exam I had ever taken.