River Co Has Paid a Dividend $2 Per Share Out of of Earnings

question 8

Multiple Choice

River Co. has paid a dividend $2 per share out of earnings of $4 per share. If the book value per share is $25 and is currently selling for $40 per share, calculate the required rate of return on the stock.

• A) 15.2%
• B) 7.2%
• C) 14.7%
• D) 13.4%

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Definitions:

Köhler

Refers to Wolfgang Köhler, a German psychologist and phenomenologist who significantly contributed to the development of Gestalt psychology.

Wertheimer

A psychologist known for his founding role in the development of Gestalt psychology, which focuses on patterns and whole forms in learning and perception.

Evolutionary Psychologists

Scientists who study the role of evolutionary processes in shaping human behavior, thought patterns, and psychological traits.

Human Mind

The totality of conscious and unconscious mental processes and activities in a human being.