A Company Just Paid a Dividend of $1

question 60

True/False

A company just paid a dividend of $1.20.If this is expected to increase by 3% p.a.indefinitely,and the required rate of return is 8%,then the theoretical share price is $15.

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Definitions:

Per Capita Real GDP

Real GDP divided by population.

Deflation

A drop in the average cost of goods and services, typically connected with a boost in the purchasing power of money.

Real GDP

An economic metric that measures the value of all goods and services produced by a country in a year, adjusted for inflation, reflecting the real growth.

GDP Deflator

An economic metric that converts the money-value measure of GDP into an index for quantity comparison by deflating price inflation.