What Is the Current Price of a Utility Company's Stock

question 9

Multiple Choice

What is the current price of a utility company's stock if the current dividend is $0.20, the expected constant growth rate in dividends is 2% and the required return is 8%?

• A) $2.00
• B) $2.20
• C) $3.20
• D) $3.40

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Definitions:

Box And Whisker Plot

A graphical representation of data that shows the distribution's shape, central value, and variability.

Percentile

A measure indicating the value below which a given percentage of observations in a group falls.

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Z-score

A statistical measurement of a score's relationship to the mean in a group of scores, often used to calculate probabilities in a normal distribution.