A Stock Has an Annual Dividend of $10

question 122

Multiple Choice

A stock has an annual dividend of $10.00 and it is expected not to grow. It is believed the stock will sell for $100 one year from now, and an investor has a discount (interest) rate of 6% (0.06) . The dividend discount model predicts the stock's current price should be:

• A) $94.67
• B) $116.00
• C) $103.77
• D) $106.60

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Definitions:

Collective Bargaining

The process of negotiation between employers and a group of employees aimed at agreements to regulate working conditions.

Strike

A collective action taken by employees refusing to work, aiming to gain concessions from their employer, typically related to wages, benefits, or working conditions.

Wrongful Acts

Actions or behaviors that are illegal or morally incorrect.

Employer

An individual or organization that hires and pays for the services of workers or employees.