On a Certain Date,Hasbro Has a Stock Price of $37

question 22

Multiple Choice

On a certain date,Hasbro has a stock price of $37.50,pays a dividend of $0.64,and has an equity cost of capital of 8%.An investor expects the dividend rate to increase by 6% per year in perpetuity.He then sells all stocks that he owns in Hasbro.Given Hasbro's share price,was this a reasonable action?

• A)No,since the constant dividend growth rate gives a stock estimate of $37.50.
• B)No,since the constant dividend growth rate gives a stock estimate greater than $37.50.
• C)Yes,since the constant dividend growth rate gives a stock estimate greater than $37.50.
• D)No,since the difference between his calculated stock price and the actual stock price most likely indicates that his estimate of dividend growth rate was incorrect.
• E)Yes,since the constant dividend growth rate gives a stock estimate less than $37.50.

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Definitions:

rRNA

Ribosomal RNA, a type of RNA that, along with proteins, forms the structure of ribosomes and helps synthesize proteins in cells.

dsRNA

Double-stranded RNA, a molecular structure consisting of two complementary strands of RNA which can interfere with gene expression.

Single Stranded DNA

DNA consisting of only one strand, as opposed to the double-stranded structure of typical DNA, often found in some viruses.

Synthetic Strand DNA

refers to artificially created sequences of DNA that are synthesized to study genetic functions or for use in biotechnology.