What Is the Required Rate of Return on a Common

question 109

Multiple Choice

What is the required rate of return on a common stock that is expected to pay a $0.75 annual dividend next year if dividends are expected to grow at 2 percent annually and the current stock price is $8.59?

• A) 8.73%
• B) 8.91%
• C) 10.73%
• D) 11.38%

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Definitions:

Confidence Interval

A range of values, derived from sample data, that is believed to contain the true population parameter with a specified level of confidence.

Level Of Confidence

The probability that the value of a parameter falls within a specified range of values, often related to confidence intervals in statistics.

Confidence Interval

A range of values, derived from sample data, that is likely to contain the value of an unknown population parameter.

Standard Deviation

A measure of the amount of variation or dispersion of a set of values around the mean.