Value a Constant Growth Stock Financial Analysts Forecast Target Corp

question 37

Multiple Choice

Value a Constant Growth Stock Financial analysts forecast Target Corp.(TGT) growth for the future to be 11 percent.Their recent dividend was $0.52.What is the value of their stock when the required rate of return is 11.89 percent?

• A)$5.25
• B)$6.48
• C)$58.43
• D)$64.85

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Definitions:

Liability Rule

A legal framework in which an infringer must compensate the owner for unauthorized use of property, typically applied in cases of copyright or patent infringements.

Injunction

A court order forbidding the continuation of behavior that leads to damages.

Coase Theorem

An economic theory that if trade in an externality is possible and there are no transaction costs, bargaining will lead to an efficient allocation of resources regardless of the initial distribution of property rights.

Liability Rules

Legal principles that dictate how responsibilities and damages are to be handled or compensated in cases of harm or infringement.