An Issue of Common Stock Is Expected to Pay a Dividend

question 16

Multiple Choice

An issue of common stock is expected to pay a dividend of $4.80 at the end of the year.Its growth rate is equal to 8%.If the required rate of return is 13%,what is its current price?

• A) $103.68
• B) $36.92
• C) $96.00
• D) $48.00

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Definitions:

U.S. Constitution

The foundational document of the United States that delineates the national frame of government, its institutions, and the rights of its citizens.

Insider Trading

Trading in the stock of a publicly listed corporation based on inside information. One who possesses inside information and has a duty not to disclose it to outsiders may not profit from the purchase or sale of securities based on that information until the information is available to the public.

Publicly Listed

A company whose shares are traded openly on a stock exchange.

Financial Status

Financial Status refers to the current state of an individual's or entity's monetary resources and liabilities.