A Stock Is Expected to Pay a $4

question 70

Multiple Choice

A stock is expected to pay a $4.00 dividend per share. The growth rate is expected to be 5 percent. If investors demand 10 percent on this stock, what is the expected price of the stock 10 years from now?

• A) $94.68
• B) $92.17
• C) $130.31
• D) $126.93

---

Definitions:

Sugar Pills

Placebo tablets made of sugar and other inert substances, used in clinical trials to test the effectiveness of medications.

Placebo Effects

Positive changes in a patient's condition after receiving a treatment with no therapeutic effect, attributed to the individual's belief in the treatment's efficacy.

Physical Disorders

Medical conditions primarily affecting the body's structure or function, not primarily due to mental health issues.

Psychological Disorders

Mental disorders or illnesses that affect an individual's thinking, feeling, mood, or behavior, and can be chronic or episodic in nature.