What Is the Required Return for a Stock That Has

question 88

Multiple Choice

What is the required return for a stock that has a 6% constant-growth rate,a price of $25,an expected dividend of $2,and a P/E ratio of 10?

• A) 5%
• B) 10%
• C) 14%
• D) 22%

---

Definitions:

Temporizing Heuristic

A cognitive strategy involving delaying decision making until more evidence or information is available.

Successful Events

Occurrences or activities that achieve their intended goals or are considered positive by the majority of participants.

Past Failures

Previous instances of not achieving desired or intended outcomes, serving as lessons for future endeavors.

System-1 Thinking

A fast, automatic, and often emotional way of thinking, as described by psychologist Daniel Kahneman.