Blue Water Tours Just Paid an Annual Dividend of $0

question 75

Multiple Choice

Blue Water Tours just paid an annual dividend of $0.72 a share. The firm has a policy of increasing the dividend by 3.0 percent annually. What is the current value of this stock at a discount rate of 11.7 percent?

• A) $8.52
• B) $8.78
• C) $8.91
• D) $9.02
• E) $9.09

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Definitions:

Maker

The individual or entity that creates or issues a promissory note and is responsible for repaying the debt specified in that note.

Holder in Due Course

A legal term describing a person who has acquired a negotiable instrument in good faith and for value, and thus has certain protections against defenses and claims that could be raised against the original issuer.

Negotiability

The attribute of a financial instrument allowing it to be transferred or assigned from one party to another.

Requirements of Negotiability

Legal criteria that an instrument must meet to be considered negotiable, allowing it to be transferred from one party to another.