A Stock Recently Paid a Dividend of $2

question 11

Multiple Choice

A stock recently paid a dividend of $2.5 per share. Its growth rate is expected to be 8 percent. Investors require a 10 percent return. The stock is selling in the market for $150. What is this stock worth and is the stock undervalued or overvalued?

• A) $125; undervalued
• B) $125; overvalued
• C) $135; undervalued
• D) $135; overvalued

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Definitions:

Systematic Name

A name given to compounds as per the rules determined by the International Union of Pure and Applied Chemistry (IUPAC).

Dihydrogen Monoxide

Another term for water, highlighting its chemical composition of two hydrogen atoms and one oxygen atom.

Common Name

A term used to refer to a species or chemical that is non-scientific and widely used among the general public.

HCl

Hydrochloric acid, a strong, corrosive acid consisting of hydrogen and chlorine, commonly used in industry and research.