A Share of Stock Will Pay a Dividend of $30

question 48

Multiple Choice

A share of stock will pay a dividend of $30 in one year, and will be sold for an expected price of $700 at that time. If the current one- year interest rate is 4.5%, the current price of the stock is approximately equal to:

• A) $501.56.
• B) $464.56.
• C) $545.56.
• D) $698.56.
• E) $483.56.

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Definitions:

Indifference Curves

Graphical representations showing combinations of two goods that give the consumer equal satisfaction and utility.

Optimum

The most favorable condition or level of something, where benefits are maximized and negative effects are minimized.

Normal Goods

Normal goods are goods for which demand increases as the income of consumers increases, showing a positive relationship between income and demand.

Income Increases

The rise in earnings received by an individual or household, which can impact consumption, savings, and investment behaviors.