What Should Be the Price for a Common Stock Paying

question 19

Multiple Choice

What should be the price for a common stock paying $3.50 annually in dividends if the growth rate is zero and the discount rate is 8 percent?

• A)$22.86
• B)$28.00
• C)$42.00
• D)$43.75

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Definitions:

Legal Action

A formal proceeding in a court of law where one party sues another for a remedy or relief.

Irreversible State

A condition or situation that cannot be returned to its original state, often used in the context of environmental damage, medical conditions, or irreversible processes.

Manufacturer's Liability

The legal responsibility of manufacturers for any harm caused by defects in their products, regardless of negligence.

Breach of Contract

The failure to perform as specified in a contract without lawful excuse, which can give rise to legal action for damages or specific performance.