The Dividends for a Particular Stock Are Expected to Grow

question 87

Multiple Choice

The dividends for a particular stock are expected to grow at 10 percent for 3 years and then 2.5 percent indefinitely. If the stock just paid an annual dividend of $1.20 a share last year and the required return is 12 percent, what is the price of the stock?

• A) $13.27
• B) $15.74
• C) $19.32
• D) $17.64
• E) $11.38

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Definitions:

Uncooperative Players

Individuals in a game or situation who choose not to follow the established rules or norms, often seeking personal gain over collective benefit.

Societies

Groups of individuals living together in organized communities with shared laws, traditions, and values.

Stereotype

Oversimplified, generalized beliefs about a group of people that often do not consider individual differences.

Expectation

The belief or anticipation that something will happen or is likely to happen, influencing perceptions and behaviors.