Torque Corporation Is Expected to Pay a Dividend of $1

question 75

Multiple Choice

Torque Corporation is expected to pay a dividend of $1.00 in the upcoming year. Dividends are expected to grow at the rate of 6% per year. The risk-free rate of return is 5% and the expected return on the market portfolio is 13%. The stock of Torque Corporation has a beta of 1.2.
-What is the intrinsic value of Torque's stock?

• A)$14.29
• B)$14.60
• C)$12.33
• D)$11.62
• E)none of the above

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Definitions:

Price Appreciation

The increase in value of an asset or investment over time.

Portfolio

A portfolio is a collection of financial investments like stocks, bonds, commodities, cash, and cash equivalents, including closed-end funds and exchange traded funds (ETFs).

Dividends

Payments made to shareholders out of a corporation's earnings, typically distributed regularly (e.g., quarterly).

Four-figure Accuracy

A level of precision in numerical information or calculations that is rounded to or expressed in thousands.