A Firm's Stock Has a Required Return of 10

question 159

Multiple Choice

A firm's stock has a required return of 10%. The stock's dividend yield is 6%. What dividend did the firm just pay if the current stock price is $40?

• A) $2.18
• B) $2.31
• C) $2.50
• D) $2.87
• E) $3.60

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Definitions:

Actual Authority

The express power granted by a principal to an agent to act on their behalf.

Operation Of Law

Changes in rights or obligations that occur automatically due to established legal rules, without the need for action by the parties involved.

Bankruptcy

A legal process through which individuals or businesses unable to meet their financial obligations can seek relief from some or all of their debts.

Partnership By Estoppel

A legal doctrine that treats a non-partnership as if it were an actual partnership because third parties were misled to believe a partnership existed.