An Issue of Common Stock Is Expected to Pay a Dividend

question 1

Multiple Choice

An issue of common stock is expected to pay a dividend of $4.00 at the end of the year.Its growth rate is equal to 8%.If the required rate of return is 15%,what is its current price?

• A) $103.68
• B) $50.00
• C) $26.67
• D) $57.14

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Definitions:

Sympathetic

Relating to the sympathetic nervous system, part of the autonomic nervous system that orchestrates the body's rapid involuntary response to dangerous or stressful situations.

Sympathetic

Pertaining to the part of the autonomic nervous system that increases heart rate, constricts blood vessels, and raises blood pressure, typically in response to stress.

Parasympathetic

Part of the autonomic nervous system responsible for conserving energy and bringing the body to a state of rest by slowing the heart rate and increasing intestinal and gland activity.

Autonomic Nervous System

The segment of the nervous system responsible for regulating automatic body functions such as digestion, heartbeat, and breathing rate.