You Wish to Earn a Return of 13% on Each

question 23

Multiple Choice

You wish to earn a return of 13% on each of two stocks, X and Y.Stock X is expected to pay a dividend of $3 in the upcoming year while stock Y is expected to pay a dividend of $4 in the upcoming year.The expected growth rate of dividends for both stocks is 7%.The intrinsic value of stock X

• A)will be greater than the intrinsic value of stock Y.
• B)will be the same as the intrinsic value of stock Y.
• C)will be less than the intrinsic value of stock Y.
• D)will be the same or greater than the intrinsic value of stock Y.
• E)None of the options

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Definitions:

Altruistic

Showing selfless concern for the well-being of others; often characterized by behavior that benefits others at a personal cost.

Political Decisions

Choices or judgments made by individuals or groups related to the governance of a country, state, or community.

Tradeoffs

Situations where to gain some advantage, one must give up another advantage, highlighting the balance of benefits and costs in decision-making.

Natural Selection

A cornerstone of evolutionary theory that explains how traits that enhance survival and reproduction become more common in successive generations of a population.