Using the One-Period Valuation Model,assuming a Year-End Dividend of $0

question 36

Multiple Choice

Using the one-period valuation model,assuming a year-end dividend of $0.11,an expected sales price of $110,and a required rate of return of 10%,the current price of the stock would be

• A)$110.11.
• B)$121.12.
• C)$100.10.
• D)$100.11

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Definitions:

Endowment

The total resources available to an individual or entity, including income, assets, and wealth.

Consumption

The process by which goods and services are used up by consumers, reflecting a part of the economy concerned with spending on final goods and services.

Price Change

A variation in the cost of a good or service over time, which can increase (price rise) or decrease (price fall), affecting demand and supply dynamics.

Utility Function

A mathematical representation describing how a consumer ranks different bundles of goods according to the level of satisfaction (utility) they provide.