Your Company's Stock Sells for $50 Per Share, Its Last

question 46

Multiple Choice

Your company's stock sells for $50 per share, its last dividend (D0) was $2.00, and its growth rate is a constant 5 percent. What is the cost of common stock, rs?

• A) 9.0%
• B) 9.2%
• C) 9.6%
• D) 9.8%
• E) 10.0%

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Definitions:

Equilibrium

A state in which market supply and demand balance each other, resulting in stable prices and quantities.

Low Risk Assets

Financial assets that are deemed to carry a low chance of losing value, typically offering lower potential returns.

High Risk Assets

Investments that offer the potential for higher returns but come with a greater possibility of loss.

Return

The process of bringing back a purchased product to the seller or store, often for a refund or exchange.