IBM Expects to Pay a Dividend of $2 Next Year

question 48

Multiple Choice

IBM expects to pay a dividend of $2 next year and expects these dividends to grow at 9% a year. The price of IBM is $80 per share. What is IBM's cost of equity capital?

• A) 9.20%
• B) 10.35%
• C) 10.93%
• D) 11.50%

---

Definitions:

Hormone Secretions

The process by which hormones are released by glands into the bloodstream.

Dm

Often shorthand for diabetes mellitus, a chronic condition characterized by high levels of sugar in the blood due to insulin production or function issues.

Correct Meaning

The accurate interpretation or definition of a word, phrase, or symbol.

Endocrine System

A system of glands that produces and secretes hormones directly into the bloodstream to regulate the body's growth, metabolism, and sexual development and function.