Super Computer Company's Stock Is Selling for $100 Per Share

question 15

Multiple Choice

Super Computer Company's stock is selling for $100 per share today. It is expected that this stock will pay a dividend of 6 dollars per share, and then be sold for $114 per share at the end of one year. Calculate the expected rate of return for the shareholders.

• A) 20%
• B) 15%
• C) 10%
• D) 25%

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Definitions:

Deposited

The act of placing money into a financial institution or account for safekeeping or to earn interest.

Present Amount

The present value of an anticipated amount of money or series of cash flows, assessed by a predetermined rate of return.

Interest Rate

The percentage at which interest is paid by a borrower for the use of money that they borrow from a lender.

Received

Pertains to the act of acquiring or getting something from another party.