BEC Inflation question

  • Creator
    Topic
  • #1758952
    j3cpa
    Participant

    An analyst expects a company to pay a dividend of $5 with a dividend growth rate of 3%. The inflation rate is expected to fall from 5% per year to 3% per year. As a result of the change in the inflation premium, the company’s (answer is:) cost of equity will likely to decrease.

    Can someone help me with this question? Won’t they have an increase in equity cost since they have to pay dividend?

    I did it. You can too!

    Study Material:
    GLEIM
    BEC - FEB/2012
    AUD - FEB/2012
    FAR - JULY/2012
    REG - JULY/2012

Viewing 4 replies - 1 through 4 (of 4 total)
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    Replies
  • #1759877
    Anonymous
    Inactive

    Maybe less inflation = lower interest rates?

    But this is my third BEC attempt, so who even CARES what BEC thinks anymore. Why don't you go HOME, BEC? Are you too GOOD for your home?

    #1759922
    j3cpa
    Participant

    looks like BEC is your last section. I'm taking it 4-13-2018. Good luck to you, friend.

    I did it. You can too!

    Study Material:
    GLEIM
    BEC - FEB/2012
    AUD - FEB/2012
    FAR - JULY/2012
    REG - JULY/2012

    #1760270
    Yahmon
    Participant

    @j3cpa inflation increases the price for goods. decreasing inflation will decrease the cost of equity

    AUD - 85
    BEC - 76
    FAR - 79
    REG - 84
     

     

     

    FAR 8/20/15 - Passed 77
    AUD 10/10/15 -
    BEC TBD
    REG TBD

    #1760417
    Anonymous
    Inactive

    Thanks j3cpa! Yes, mine will be in May or June, so hope to see us both at the winners circle. 🙂

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