High Fly Airline Is Expected to Pay a Dividend of $7

question 20

Multiple Choice

High Fly Airline is expected to pay a dividend of $7 in the coming year.Dividends are expected to grow at the rate of 15% per year.The risk-free rate of return is 6% and the expected return on the market portfolio is 14%.The stock of High Fly Airline has a beta of 3.00.The intrinsic value of the stock is ________.

• A) $46.67
• B) $50.00
• C) $56.00
• D) $62.50
• E) none of these

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Definitions:

Random Sampling

A method of selecting a subset of individuals from a population, where each individual has an equal chance of being chosen.

Correlation Coefficient

A statistical measure that describes the size and direction of a relationship between two or more variables, usually ranging from -1 to +1.

Statistical Index

A statistical index is a measurement that aggregates and quantifies data, often used for comparing and analyzing various indicators or trends over time.

Confounding Variable

An external factor in an experiment that can affect the results in a way that is not intended, making it difficult to establish a clear cause-and-effect relationship.