Consider a Firm That Had Been Priced Using a 6

question 31

Multiple Choice

Consider a firm that had been priced using a 6 percent growth rate and a 9 percent required rate. The firm recently paid a $0.50 dividend. The firm has just announced that because of a new joint venture, it will likely grow at an 8 percent rate. How much should the stock price change (in dollars and percentage) ?

• A) $33.33, 67 percent
• B) $33.33, 198 percent
• C) $36.33, 67 percent
• D) $36.33, 206 percent

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Definitions:

Videotaped Conversation

A recorded interaction between individuals on video, used for analysis or study.

Equal Participation

The concept that all members of a group have the same opportunity and responsibility to contribute to a process or activity.

Self-Handicapping

A cognitive strategy by which people avoid effort in the hopes of keeping potential failure from hurting self-esteem.

Disadvantage

A circumstance or condition that unfavorably affects someone, reducing their chances of success.