Use the Information for the Question(s)below

question 62

Multiple Choice

Use the information for the question(s) below.
Von Bora Corporation is expected to pay a dividend of $1.40 per share at the end of this year and a $1.50 per share at the end of the second year.You expect Von Bora's stock price to be $25.00 at the end of two years.Von Bora's equity cost of capital is 10%.
-Suppose you plan to hold Von Bora stock for one year.The price one would expect to be able to sell a share of Von Bora stock for in one year is closest to:

• A)$26.50.
• B)$22.70.
• C)$23.15.
• D)$24.10.

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Definitions:

Short Positions

An investment strategy where an investor sells borrowed securities with the intention of buying them back at a lower price to profit from a price decline.

Delivery Date

The specific date on which the delivery of the commodities, securities, or other assets is scheduled to occur in a contract.

Financial Futures

Contracts to buy or sell financial instruments, like currencies or government bonds, at a predetermined future date and price.

S&P 500 Index

A stock market index in the United States comprised of 500 major companies with publicly traded shares on the New York Stock Exchange or NASDAQ, determined by their market capitalizations.