A Stock Recently Paid a Dividend of $2

question 55

Multiple Choice

A stock recently paid a dividend of $2.5 per share. Its growth rate is expected to be 8%. Investors require a 10% return. The stock is selling in the market for $150. What is this stock worth and is the stock undervalued or overvalued?

• A) $125; undervalued
• B) $125; overvalued
• C) $135; undervalued
• D) $135; overvalued

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Definitions:

Congruence

Refers to the alignment or agreement between one’s internal feelings and external expressions, often highlighted in therapeutic relationships.

Spontaneity

The quality of being spontaneous; acting on impulse or without premeditation.

Supporting Nonverbal Behaviors

Nonverbal actions or gestures that reinforce verbal communication and show empathy or understanding towards others.

Empathic Responding

The act of responding to another's emotional state by understanding, feeling, and communicating that understanding back to them.