... 1 Chapter 11 Stock Valuation and Risk Financial Markets and Institutions, 7e, Jeff Madura Copyright ©2006 by South-Western, a division of Thomson Learning. All rights reserved. 2 Chapter ... future. Investors require a return of 15% on the firm’s stock. According to the dividend discount model, what is a fair price for the firm’s stock? 14$ %15 10.2$ )1( Price 1 === + = ∑ ∞ = k D ... annually. Investors require a return of 15% on the firm’s stock. According to the dividend discount model, what is a fair price for the firm’s stock? 50.17$ %3 %15 10.2$ )1( Price 1 1 = − = − = + =...