IBM's Stock Price Is $22, It Is Expected to Pay

question 87

Multiple Choice

IBM's stock price is $22, it is expected to pay a $2 dividend, and analysts expect the firm to grow at 10 percent per year for the next five years. TDI's stock price is $10, it is expected to pay a $1 dividend, and analysts expect the firm to grow at 12 percent per year for the next five years. What is the difference in the two firms' required rates of return?

• A) 2.91 percent
• B) 1.82 percent
• C) 2.03 percent
• D) 3.23 percent

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Definitions:

Vagina

The elastic, muscular tube, extending from the cervix to its external opening, that receives the penis during heterosexual intercourse and serves as the birth canal.

Uterus

A major female reproductive organ in many animals, including humans, where offspring are conceived and in which they gestate before birth.

Cervix

The lower part of the uterus in the female reproductive system, connecting the uterus to the vagina.

Pap Smear

A screening test for cervical cancer involving the collection of cells from a woman's cervix to detect abnormalities that may indicate precancerous or cancerous conditions.