A Firm Has Experienced a Constant Annual Rate of Dividend

question 163

Multiple Choice

A firm has experienced a constant annual rate of dividend growth of 9 percent on its common stock and expects the dividend per share in the coming year to be $2.70. The firm can earn 12 percent on similar risk involvements. The value of the firm's common stock is ________.

• A) $22.50/share
• B) $9/share
• C) $90/share
• D) $30/share

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Definitions:

Social Learning

A theory which suggests that people can learn new behaviors and attitudes through observation of others' actions and the consequences they face.

Traditional Behaviorism

A branch of psychology that studies observable behaviors as a response to stimuli, without considering internal processes.

Personality

The combination of characteristics or qualities that form an individual's distinctive character, influencing behaviors, thoughts, and emotions.

Allocare

Literally, “other-care”; the care of children by people other than the biological parents.