You Are Trying to Determine the Appropriate Price to Pay

question 126

Multiple Choice

You are trying to determine the appropriate price to pay for a share of common stock.If you purchase this stock,you plan to hold it for 1 year.At the end of the year you expect to receive a dividend of $5.50 and to sell the stock for $154.The appropriate rate of return for this stock is 16 percent.What should be the current price of this stock?

• A) $137.50
• B) $150.22
• C) $162.18
• D) $98.25
• E) $175.83

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Definitions:

Heritable Risk Factor

Any attribute, characteristic, or exposure that increases the likelihood of developing a disease or injury, which can be passed from parent to offspring through genes.

Medial Prefrontal Cortex

A part of the frontal lobe of the brain involved in decision-making, social behavior, and personality expression.

Operant Conditioning

Form of learning in which behaviors lead to consequences that either reinforce or punish the organism, leading to an increased or a decreased probability of a future response.

Observational Learning

Learning that occurs when a person observes the rewards and punishments of another’s behavior and then behaves in accordance with the same rewards and punishments.