You Have Been Researching a Company and Have Estimated That

question 54

Multiple Choice

You have been researching a company and have estimated that the firm's stock will sell for $44 a share one year from now. You also estimate the stock will have a dividend yield of 2.18 percent. How much are you willing to pay per share today to purchase this stock if you desire a total return of 15 percent on your investment?

• A)$37.55
• B)$38.00
• C)$38.24
• D)$39.00
• E)$40.20

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Definitions:

Sale of Goods

A transaction between two parties where the seller transfers ownership of tangible personal property to the buyer for a price.

Auction Without Reserve

An auction at which the auctioneer cannot withdraw goods unless no bid is made within a reasonable time.

Auctioneer

A person who conducts sales at auctions by accepting bids and declaring goods sold.

Highest Bid

The highest price offered by a bidder at an auction or in a competitive bidding process.