You Are Considering Acquiring a Common Stock That You Would

question 46

Multiple Choice

You are considering acquiring a common stock that you would like to hold for one year. You expect to receive both $0.75 in dividends and $16 from the sale of the stock at the end of the year. The maximum price you would pay for the stock today is _____ if you wanted to earn a 12% return.

• A) $23.91
• B) $14.96
• C) $26.52
• D) $27.50
• E) None of the options are correct.