A Firm Has an Expected Dividend Next Year of $1

question 138

Multiple Choice

A firm has an expected dividend next year of $1.20 per share, a zero growth rate of dividends, and a required return of 10 percent. The value of a share of the firm's common stock is

• A) $120.
• B) $10.
• C) $12.
• D) $100.

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Definitions:

Alternative Hypothesis

The hypothesis that contradicts the null hypothesis, representing the possibility that there is an effect or a difference.

Seat Belts

Safety devices designed to secure the occupant of a vehicle against harmful movement that may result during a collision or a sudden stop.

Independence

A condition where the occurrence of one event does not affect the probability of another event.

Salesperson

An individual who sells goods, services, or both to consumers or other businesses, often working on commission or for a specific company.