If the Annual Earnings for a Company Are $10, the Expected

question 25

Multiple Choice

If the annual earnings for a company are $10, the expected future price of its stock is $100, and the required rate of return is 8%, then the current price of the stock should be

• A) $100.
• B) $102.59.
• C) $118.
• D) none of the above.

---

Definitions:

Quantity Demanded

The total amount of a good or service that consumers are willing and able to purchase at a specific price, holding all else constant.

Demand Curve

A graphical representation showing the relationship between the price of a good or service and the quantity demanded by consumers over a range of prices.

Upward-Sloping

Characteristic of a curve on a graph that demonstrates an increase in one variable as another variable increases, often seen in supply curves.

Demand Curve

A graph showing the relationship between the price of a good or service and the quantity demanded for a given period, typically demonstrating an inverse relationship.