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

question 42

Multiple Choice

A stock paying $5 in annual dividends sells now for $80 and has an expected return of 14%.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 Expected return =

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Definitions:

Nondisclosure

An agreement or clause that prohibits the sharing of confidential information.

Material Fact

Information that is significant enough to influence a decision or the outcome of a legal case or transaction.

Unilateral Mistake

The result of an error by one party about a material fact, that is, one that is important in the context of a particular contract.

Genuine Assent

An agreement to enter into a contract that is not clouded by factors such as fraud, duress, or mistake, indicating true and voluntary agreement.