Under the Efficient Markets Hypothesis, What Would Be the Price

question 41

Multiple Choice

Under the efficient markets hypothesis, what would be the price per share of a company whose current dividend is $10.00 and whose dividends are expected to grow by 3% per year (assume the risk-adjusted interest rate is 10%) ?

• A)$74.62
• B)$79.23
• C)$138.57
• D)$147.14

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Definitions:

Scarcity

The condition of being in short supply; a situation in which something cannot satisfy all those who want it.

Resistance

The refusal to accept or comply with something; the attempt to prevent something by action or argument.

Overheard Messages

Information or communication unintentionally caught or received from others' conversations, which might not have been meant to be directly shared with the listener.

Advertisement Irritation

The annoyance and displeasure experienced by consumers as a result of aggressive or excessive marketing.