On a Certain Date, Harvey Norman Has a Share Price

question 34

Multiple Choice

On a certain date, Harvey Norman has a share 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 the Harvey Norman shares that he owns. Given Harvey Norman's share price, was this a reasonable action?

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

Identify and formulate correct null and alternative hypotheses.

Distinguish directional from non-directional hypotheses and their implications for statistical tests.

Understand the concept of a one-tailed and two-tailed test in the context of hypothesis testing.

Calculate the standard error of the mean for given population parameters.

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Definitions:

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The deliberate altering of the human body for aesthetic or non-medical reasons, such as tattoos, piercings, and plastic surgery.

Deviance

Behaviors or actions that violate the norms and expectations of a society or social group.

Beauty

An aesthetic quality or feature that gives pleasure to the senses or exalts the mind and spirit.

Utensil

A tool or implement, especially one used in the kitchen, for preparing, serving, or eating food.