What Should Be the Price of a Stock That Offers

question 65

Multiple Choice

What should be the price of a stock that offers a $4 annual dividend with no prospects of growth, and has a required return of 12.5 percent?

• A)$8.50
• B)$25.00
• C)$32.00
• D)$50.00

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Definitions:

Holder in Due Course

A party that has acquired a negotiable instrument in good faith, for value, and without notice of any defect, and thus is protected from certain defenses and claims.

Value for the Check

The amount of money represented by a check; the monetary worth or consideration for which a check is issued.

Holder

An individual or entity that possesses or owns something, such as a holder of a financial instrument or legal title.

Liable on Instrument

The responsibility to pay or perform as specified in a negotiable instrument, such as a check or promissory note, upon its maturity.