What Is the Required Return from Truman Planned Community Stock

question 102

Multiple Choice

What is the required return from Truman Planned Community stock if its beta is 1.1,the return on the market portfolio is 12%,the risk free rate is 3%,next year's dividend will be $1.25 per share and dividends are expected to grow 5% per year?

• A) $17.86 per share
• B) $62.50 per share
• C) $53.00 per share
• D) 5.2%
• E) 12.9%

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Definitions:

Price Ceilings

A government-imposed limit on the price charged for a product to prevent prices from rising to a certain level above equilibrium.

Price Floors

Government or regulatory-set minimum prices for goods or services, aimed at preventing prices from falling too low.

Price

The cost involved in purchasing a specific good or service.

Shortage

A situation where the demand for a product exceeds its supply, often leading to higher prices.