If the Dividend Yield for Year One Is Expected to Be

question 88

Multiple Choice

If the dividend yield for year one is expected to be 5% based on the current price of $25, what will the year four dividend be if dividends grow at a constant 6%?

• A)$1.33
• B)$1.49
• C)$1.58
• D)$1.67

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Definitions:

Coase Theorem

An economic theory that suggests that if property rights are clearly defined and transaction costs are negligible, private negotiations will lead to the efficient resolution of disputes regardless of the initial allocation of rights.

Coase Theorem

A theory suggesting that if trade in an externality is possible and there are no transaction costs, bargaining will lead to an efficient outcome regardless of the initial allocation of property.

Coase Theorem

A legal and economic theory stating that if trade in an externality is possible and there are no transaction costs, bargaining will lead to an efficient outcome regardless of the initial allocation of property rights.

Transaction Costs

The expenses incurred when buying or selling a good or service, which can include search, bargaining, and enforcement costs.