You Wish to Earn a Return of 12% on Each

question 44

Multiple Choice

You wish to earn a return of 12% on each of two stocks,A and B.Each of the stocks is expected to pay a dividend of $2 in the upcoming year.The expected growth rate of dividends is 9% for stock A and 10% for stock B.The intrinsic value of stock A _____.

• A)will be greater than the intrinsic value of stock B
• B)will be the same as the intrinsic value of stock B
• C)will be less than the intrinsic value of stock B
• D)A or B
• E)none of the above is a correct statement.

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Definitions:

Securities Markets

The mechanism for buying and selling securities.