HIJ is currently selling for $10 per share. The security is eligible for 50% margin. 1,000 shares are bought with an initial deposit of $8,000.

2.50¬†You expect that Trader Moe’s and Buyer Sam’s will continue with the same dividend pattern moving forward. For Seller Bob’s you expect it to increase its dividend by a constant 8% starting in year 4.The current stock price for each stock is as follows:Trader Moe’s – $15.00Buyer Sam’s – $38.00Seller Bob’s – $28.00If you require 15% return on your investments, which stock would you prefer to buy and why? (Hint: use the dividend discount model and compare this value to the share prices above)


Approximately 250 words