What Should Be the Current Price of a Stock If

question 32

Multiple Choice

What should be the current price of a stock if the expected dividend is $5, the stock has a required return of 20 percent, and a constant dividend growth rate of 6 percent?

• A)$19.23
• B)$25.00
• C)$35.71
• D)$37.86 P = 5.00/(.20 - .06)
• P = 5.00/.14

---

Definitions:

Non-thrifty Genotype

A genetic makeup that does not efficiently store fat or energy, possibly leading to disadvantages in environments where food resources are scarce.

Type 2 Diabetes

A chronic condition that affects the way the body processes blood sugar (glucose), often due to insulin resistance.

Genocide

A systematic campaign aimed at the extermination of an identified group of people based on ethnicity, religion, or nationality.

Intelligence

The ability to acquire, understand, and use knowledge, solve problems, and adapt to new situations.