A Stock Paying $5 in Annual Dividends Sells Now for $80

question 38

Multiple Choice

A stock paying $5 in annual dividends sells now for $80 and has an expected return of 14 percent.What might investors expect to pay for the stock one year from now?

• A)$82.20
• B)$86.20
• C)$87.20
• D)$91.20

---

Definitions:

Quantity Supplied

The total amount of a good that sellers are willing to sell at a given price over a specified period.

Equilibrium Price

The price at which the quantity of goods supplied is equal to the quantity of goods demanded.

Demand

The quantity of a particular good or service that consumers are willing and able to purchase at various prices during a given period of time.