What Would Be the Maximum an Investor Should Pay for the Common

question 75

Multiple Choice

What would be the maximum an investor should pay for the common stock of a firm that has no growth opportunities but pays a dividend of $1.36 per year? The next dividend will be paid in exactly 1 year. The required rate of return is 12.5%.

• A) $17.00
• B) $9.52
• C) $10.88
• D) $12.24

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Definitions:

Local Chapter

A regional or local division of a larger organization, often responsible for carrying out the organization's mission in a specific geographical area.

Collective Impact Model

An approach to social change that focuses on cross-sector coordination rather than the isolated intervention of individual organizations.

Wolff's Criticisms

Refers to the critiques put forth by philosopher Robert Paul Wolff, often focused on authority, democracy, and individual autonomy in political contexts.

Drivers

Factors or forces that influence the direction and intensity of trends or actions in a specific context.