What Should Be the Current Price of a Stock If

question 74

Multiple Choice

What should be the current price of a stock if the expected dividend is $5, the stock has a required return of 20 percent, and a constant dividend growth rate of 6 percent?

• A)$19.23
• B)$25.00
• C)$35.71
• D)$37.86

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Definitions:

Symbolic Functioning

The ability to use symbols, signs, or objects to represent something else, a milestone in cognitive development allowing for complex thought.

Concrete Operations

A stage in Piaget's theory of cognitive development, typically from ages 7 to 11, when children gain the ability to think logically about concrete events.

Sensorimotor Period

The first of Jean Piaget's four stages of cognitive development, ranging from birth to about 2 years old, where infants learn about the environment through sensory experiences and motor activities.

Egocentrism

The cognitive inability to differentiate between one's own perspective and that of others, often seen in early childhood.