You Are Considering Acquiring a Common Stock That You Would

question 95

Multiple Choice

You are considering acquiring a common stock that you would like to hold for one year.You expect to receive both $2.50 in dividends and $28 from the sale of the stock at the end of the year.The maximum price you would pay for the stock today is _____ if you wanted to earn a 15% return.

• A) $23.91
• B) $24.11
• C) $26.52
• D) $27.50
• E) none of these

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Definitions:

Endoplasmic Reticulum

An organelle in eukaryotic cells comprising a network of membranous tubules and sacs, involved in protein and lipid synthesis.

Lactose

A type of sugar found in milk and dairy products, composed of glucose and galactose units.

E. Coli

Escherichia coli, a rod-shaped bacterium that is commonly found in the intestines of warm-blooded organisms and can be either harmless or pathogenic.

Lac Repressor

A protein that binds to the lac operon and inhibits the metabolism of lactose in bacteria.