Easy Points One Has Just Paid a Dividend of $2

question 57

Multiple Choice

Easy Points One has just paid a dividend of $2.50,has a growth rate of 11% and a current stock price of $52.65.What is the required return for the security?

• A) 15.75%
• B) 16.27%
• C) 15.750%
• D) 27.27%

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Definitions:

Inflation Rate

How quickly the average cost of products and services goes up, causing the ability to purchase to decline.

Price/Earnings Ratio

A valuation ratio of a company's current share price compared to its per-share earnings, indicating the dollar amount an investor can expect to invest in a company in order to receive one dollar of that company’s earnings.

Interest Rates

The proportion of a loan charged as interest to the borrower, typically expressed as an annual percentage of the loan outstanding.

Inflation

The rate at which the general level of prices for goods and services is rising, eroding purchasing power over time.