The Current Expected Value of a Stock Is $32

question 3

Multiple Choice

The current expected value of a stock is $32. If investors demand a higher rate of return of 10 percent instead of the 8 percent rate of return, what will the impact on the stock price of the firm be?

• A)The stock price will increase by 10 percent.
• B)The stock price will not be affected by the change in the rate of return.
• C)The stock price will increase to $35.
• D)The stock price will reduce to zero.
• E)The stock price will decrease as a result of the higher rate of return demanded by investors.

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Definitions:

Parietal Bones

Skull bones located on the sides of the head, forming the top and sides of the cranial cavity.

Occipital

Pertaining to the occiput, the posterior portion of the skull or the back of the head.

Temporal

Temporal refers to anything related to time or the temporal lobe in the brain, which is involved in processing auditory information and encoding memory.

Maxilla

The upper jawbone, responsible for forming the upper dental arch.