What Constant Growth Rate in Dividends Is Expected for a Stock

question 96

Multiple Choice

What constant growth rate in dividends is expected for a stock valued at $32.00 if next year's dividend is forecast at $2.00 and the appropriate discount rate is 13 percent?

• A)5.00 percent
• B)6.25 percent
• C)6.75 percent
• D)15.38 percent

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Definitions:

Large Abdomen

A condition where the belly is unusually enlarged or distended, potentially indicative of diseases, obesity, or fluid accumulation.

Thin Skin

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Adrenocorticotropic hormone, a pituitary hormone that stimulates the production of cortisol by the adrenal glands.

Adrenal Cortex

The outer portion of the adrenal gland that produces essential hormones like cortisol and aldosterone.