Sure Tool Company Is Expected to Pay a Dividend of $2

question 64

Multiple Choice

Sure Tool Company is expected to pay a dividend of $2 in the upcoming year. The risk-free rate of return is 4% and the expected return on the market portfolio is 14%. Analysts expect the price of Sure Tool Company shares to be $22 a year from now. The beta of Sure Tool Company's stock is 1.25.
-The market's required rate of return on Sure's stock is _____.

• A)14.0%
• B)17.5%
• C)16.5%
• D)15.25%
• E)none of the above

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Definitions:

Fixation

According to Freud, a condition in which the id, ego, and superego do not mature properly and are frozen at an early stage of development.

Libido

The sexual energy that fuels the id.

Sexual Energy

The vitality and enthusiasm related to sexual feelings and activities, often considered as a driving force of creativity and relationship dynamics.

Id

According to Freud, the psychological force that produces instinctual needs, drives, and impulses.