Torque Corporation Is Expected to Pay a Dividend of $1

question 74

Multiple Choice

Torque Corporation is expected to pay a dividend of $1.00 in the upcoming year.Dividends are expected to grow at the rate of 6% per year.The risk-free rate of return is 5%, and the expected return on the market portfolio is 13%.The stock of Torque Corporation has a beta of 1.2. What is the return you should require on Torque's stock?

• A)12.0%
• B)14.6%
• C)15.6%
• D)20%

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Definitions:

Forthcoming Contribution

Expected or promised financial donations or investments that are pledged to be given at a future date.

Cash Account

A type of account where all transactions involve the immediate payment of cash.

Partnership Loan

A type of financing where a lender provides funds to a partnership, which is typically used for business operations or expansion.

Liquidation Expenses

Costs incurred during the winding up of a company, including legal fees, selling expenses, and other administrative expenses involved in liquidating the company's assets.