A Particular Stock Pays an Annual Dividend of $2 Per

question 53

Multiple Choice

A particular stock pays an annual dividend of $2 per share and the annual dividend yield is 4 percent. The price of a share of this stock is

• A)$2.08.
• B)$5.00.
• C)$8.00
• D)$50.00.

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Definitions:

Foreign Exchange Market

A global marketplace for exchanging national currencies against one another, fundamental for international trade and investment.

Relative PPP

Stands for Relative Purchasing Power Parity, a theory that suggests that in the long term, exchange rates should adjust so that similar goods cost the same in different countries.

UIP

Uncovered Interest Parity, a financial theory stating that the difference in interest rates between two countries will equal the expected change in exchange rates between their currencies.

Spot Exchange Rate

The current exchange rate at which currencies can be exchanged for immediate delivery, reflecting the market's immediate valuation.