You Wish to Earn a Return of 11% on Each

question 23

Multiple Choice

You wish to earn a return of 11% on each of two stocks,A and B. Stock A is expected to pay a dividend of $3 in the upcoming year while stock B is expected to pay a dividend of $2 in the upcoming year. The expected growth rate of dividends for both stocks is 4%. Using the constant growth DDM, the intrinsic value of stock A _________.

• A) will be higher than the intrinsic value of stock B
• B) will be the same as the intrinsic value of stock B
• C) will be less than the intrinsic value of stock B
• D) more information is necessary to answer this question

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Definitions:

Soil

The top layer of the earth's surface consisting of rock and mineral particles mixed with organic matter, supporting plant life.

Crime Site

The location where a criminal act has taken place, often analyzed for forensic evidence.

Rotating Skimmer

A rotating skimmer is a device used in separation or filtration processes that involves the rotation of a component to skim off materials from the surface of a liquid.

Sedimentation Tank

A tank used in water and wastewater treatment processes where particles settle to the bottom under gravity, aiding in purification.