Next Year, the Price of a Stock Is Expected to Be

question 92

Multiple Choice

Next year, the price of a stock is expected to be $2,200 and the stock will pay a $55 dividend. The interest rate is 10%. Based on the dividend-discount model, what is the current price of this stock?

• A) $1,980
• B) $2,000
• C) $2,050
• D) $2,035

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Definitions:

Negotiation

The process of discussing with another party to reach a mutually acceptable agreement or compromise.

Order Paper

Order Paper is a document listing the business or order of events to be discussed in parliamentary or legislative sessions.

Bearer Paper

A negotiable instrument or document that entitles the holder or bearer to rights or property stated in the document, without requiring endorsement.

Indorsement

The act of endorsing a check or bill of exchange to transfer the right to cash or deposit to someone else.