What Rate of Return Is Expected from a Stock That

question 109

Multiple Choice

What rate of return is expected from a stock that sells for $30 per share, pays $1.50 annually in dividends, and is expected to sell for $33 per share in one year?

• A)5.00 percent
• B)10.00 percent
• C)14.09 percent
• D)15.00 percent Expected Return =

Understand the justification and accounting treatment for expensing R&D.

Comprehend the accounting for assets when future economic benefits do not exceed carrying value.

Recognize U.S. GAAP rules for software development costs.

Analyze the impact of R&D expenditures on investor decisions.

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Definitions:

Initial Endowment

Refers to the initial allocation of goods, resources, or wealth that an individual or entity possesses before engaging in any transactions.

Diagonal Line

A straight line connecting two nonadjacent corners of a figure, such as a square or rectangle, or a line segment that runs across a geometric figure.

First Welfare Theorem

An economic principle stating that under certain conditions, competitive markets (with no externalities) will lead to a Pareto efficient allocation of resources.

Pure Exchange Economy

An economic model where all agents are consumers, and the only economic activities are the consumption and exchange of goods, with no production.