For a Particular Share the Dividend to Be Paid in the First

question 23

Multiple Choice

For a particular share the dividend to be paid in the first year is 50p, the current price is 400p, and the rate at which the dividend stream is expected to grow is 2 per cent. What is the expected rate of return on the shares?

• A) 16%
• B) 8.2%
• C) 12.2%
• D) 14.5%

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Definitions:

Sales Returns

The process of returning purchased goods to the seller, often resulting in a refund to the buyer and an adjustment in sales revenue for the seller.

FOB Shipping Point

A shipping term indicating that the buyer assumes ownership and responsibility for goods at the seller's location, and thus is responsible for the shipping costs and potential damages.

Ownership

The legal right or title to an asset or property, encompassing the control, use, and disposition of the asset.

Perpetual System

An inventory management system that records sales and purchases of goods instantly through computerized systems to maintain accurate inventory levels at all times.