Declining Corporation Just Paid a Dividend of $1

question 10

Multiple Choice

Declining Corporation just paid a dividend of $1.23 and has an expected growth rate of -5% for the foreseeable future,if the discount rate is 7% what is the appropriate stock price today?

• A) $ 9.74
• B) $ 10.25
• C) $ 9.67
• D) $ 11.43

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Definitions:

Human Motivation

The study of what drives individuals to initiate, direct, and sustain behaviors to satisfy their needs and achieve goals.

Validity Effect

The tendency of people to believe that a statement is true or valid simply because it has been repeated many times.

Familiarity Effect

A psychological phenomenon whereby people tend to develop a preference for things merely because they are familiar with them.

Cognitive Dissonance

The state of having inconsistent thoughts, beliefs, or attitudes, especially as relating to behavioral decisions and attitude change.