What Is the Expected Price for the Stock of a Company

question 16

Multiple Choice

What is the expected price for the stock of a company that just paid a dividend of $3.00? The company has a dividend payout ratio of 50 percent,discount rate of 25 percent,and a P/E of 10.

• A) $60.00
• B) $30.00
• C) $12.00
• D) $45.00
• E) $22.50

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Definitions:

ABS Requirement

A standard or regulation that mandates the inclusion of Anti-lock Braking Systems in vehicles, to improve safety by preventing wheel lockup during braking.

Trailer Brake System

A braking mechanism specifically designed for trailers, which works in conjunction with the tow vehicle's brakes to ensure safe stopping power.

Tandem Drive

A configuration in which two separate drives work in conjunction to power a vehicle, often seen in heavy vehicles with dual rear axles.

ABS Configurations

Relevant to Anti-lock Braking Systems, referring to the different setups and components that prevent wheel lockup during braking.