Confusion Corp Is Expected to Pay a Dividend of $2

question 114

Multiple Choice

Confusion Corp is expected to pay a dividend of $2 in the upcoming year. The risk-free rate of return is 4%, and the expected return on the market portfolio is 14%. The beta of Confusion Corp's stock is 1.25. If Confusion's intrinsic value is $21.00 today, what must be its growth rate?

• A) 0.0%
• B) 10%
• C) 4%
• D) 6%
• E) 7%

---

Definitions:

Informational Cascade

A process in decision-making where individuals consecutively follow others' actions or choices ignoring their own private information.

Investment Opportunity

A chance to invest capital with the expectation of achieving a future financial return.

Full Information

A market condition where all participants have access to all relevant information, eliminating information asymmetry.

Housing Prices

Housing prices refer to the cost of purchasing residential properties, which can fluctuate based on market demand, location, size, and other factors.