Janice Is Evaluating a Stock That Currently Pays a Dividend

question 24

Multiple Choice

Janice is evaluating a stock that currently pays a dividend of $0.25 per share. She expects this level of dividend to continue indefinitely, and she has determined that 5% is the appropriate required return for the stock. What is the most she should pay for the stock?

• A) $1.25 per share
• B) $2.50 per share
• C) $5.00 per share
• D) $7.50 per share

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Definitions:

Treatment

A method or course of action used to improve a condition or alleviate an ailment or disease.

Comorbidity

The simultaneous presence of two or more diseases or medical conditions in a patient.

Anxiety

an emotion characterized by feelings of tension, worried thoughts, and physical changes like increased blood pressure that can be a normal reaction to stress or part of an anxiety disorder.

Depression

A mental disorder exemplified by a continual sense of despair or apathy towards activities, leading to considerable difficulties in performing daily tasks.