Suppose You Plan to Hold a Stock for One Year

question 117

Multiple Choice

Suppose you plan to hold a stock for one year.You expect that,in one year,it will sell for $30 and pay a dividend of $3 per share.If your required return on equity is 10%,what is the most you should be willing to pay for the share today?

• A) $3.30
• B) $23
• C) $30
• D) $33

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Definitions:

Mnemonic Device

a learning technique that aids information retention or retrieval by making associations with memorable constructs.

Implicit Memory

A form of enduring memory that allows individuals to carry out activities without being consciously aware of past encounters.

Long-term Memory

The phase of the memory process that is capable of storing information for extended periods of time, ranging from minutes to a lifetime.

Short-term Memory

A cognitive system with a limited capacity that is capable of temporarily holding information available for processing.