You Are Trying to Determine the Appropriate Price to Pay

question 126

Multiple Choice

You are trying to determine the appropriate price to pay for a share of common stock.If you purchase this stock,you plan to hold it for 1 year.At the end of the year you expect to receive a dividend of $5.50 and to sell the stock for $154.The appropriate rate of return for this stock is 16 percent.What should be the current price of this stock?

• A) $137.50
• B) $150.22
• C) $162.18
• D) $98.25
• E) $175.83

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Definitions:

Stop Reinforcement

The cessation of reinforcements (reward or punishment), leading to an extinction of learned behavior.

Extinguish

To put out or bring to an end, often used in the context of extinguishing a fire or gradually reducing a behavior through the process of elimination in psychology.

Behaviour

The behavior or responses of a person or group when influenced by external or internal factors.

Negative Reinforcer

A negative reinforcer is an unpleasant stimulus whose removal leads to an increase in the probability that a preceding response will be repeated in the future.