Coca-Cola (KO) is a dividend-paying companyCoca-Cola (KO) is a dividend-paying company. Recently, dividends for Coca-Cola have increased at about 5.5 percent per year. Find the most recent closing monthly stock price under the “Mthly. Adj. Prices” link. Locate the most recent annual dividend for KO and calculate the dividend yield. Using your answer and the 5.5 percent dividend growth rate, what is the required return for shareholders? Suppose instead that you know that the re-quired return is 13 percent. What price should Coca-Cola stock sell for now? What if the required return is 15 percent?According to the 2001 Value Linethe dividend growth for Phillips Petroleum (P) is 2.5 percent. Find the cur-rent price quote and dividend information at. If the growth rate given in the Value Lineis correct, what is the required re-turn for Phillips Petroleum? Does this number make sense to you?Go toand enter ONE (for Bank One) as the ticker symbol. You can enter a required return in the Discount Rate box and the site will calculate the stock price using the dividend discount model. If you want an 11 percent return, what price should you be will-ing to pay for the stock? At what required return does the current stock price make sense? You will need to enter different required returns until you arrive at the current stock price. Does this required return make sense? Using this market required return for Bank One, how does the price change if the required return increases by 1 percent? What does this tell you about the sensitivity of the divi-dend discount model to the inputs of the equation?What is the most expensive publicly traded stock in the United States? Go toand enter BRKA (for Berkshire Hathaway Class A) and select “Detailed” on the pull down menu. What is the current price per share? What is the 52-week high and low? How many shares trade on an av-erage day? How many shares have traded today?You are interested in buying stock in Coca-Cola (KO). You believe that the dividends will grow at 15 percent for the next four years and level off at 6 percent thereafter. Using the most recent dividend on, if you want a 12 percent return, how much should you be willing to pay for a share of stock?How does a stock trade take place? Go to, click on “The Trading Floor” and “Anatomy of a Trade.” Describe the process of a trade on the NYSE.
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