You Expect a Share of RiskyEcon

question 191

Multiple Choice

You expect a share of RiskyEcon.com to sell for $56 a year from now and to pay a dividend of $1 per share annually.If the current interest rates on government bonds is 5%,but you demand a risk premium of 5% to hold a share of this risky stock,what is the most you would be willing to pay for this stock today (rounded to the nearest dollar) ?

• A) $52.
• B) $54.
• C) $56.
• D) $57.
• E) $63.

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Definitions:

Upstream Partners

Businesses or individuals who provide goods or services to another company as inputs for that company's production process, typically earlier in the supply chain.

Aggregate Planner

A tool or professional responsible for developing, analyzing, and maintaining a schedule for an organization's overall operations to meet demand forecast.

Inventory Holding Cost

The total cost associated with storing and maintaining a company's inventory, including warehousing, insurance, taxes, and opportunity costs.

Overtime

Additional time worked by employees beyond the normal working hours, often compensated at a higher pay rate.