Tammy Welsh Has Two Investment Options to Choose From

question 97

Essay

Tammy Welsh has two investment options to choose from. The stocks of both ABC Inc. and XYZ Corp. are currently trading at $200. ABC Inc. is paying a dividend of $10, and is expected to trade at $215 in a year's time. XYZ Corp. is paying a higher dividend of $25. However, the price of XYZ's stock is only expected to go up to $203 a year from now. Experts are estimating inflation to be about 2% in a year's time.
A) In which stock should Tammy invest and why?
B) If the expected inflation rate was revised to 2.5%, would it alter Tammy's choice? Explain your answer.

• A) In which stock should Tammy invest and why?
• B) If the expected inflation rate was revised to 2.5%, would it alter Tammy's choice? Explain your answer.

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Definitions:

Instance Variables

Variables defined in a class for which each instantiated object of the class has its own separate copy, or instance.

Mutator Methods

Methods designed to set or modify the values of an object's attributes while keeping the encapsulation principle intact.

Integer Values

Whole numbers that can be positive, negative, or zero, not including decimals or fractions.

Instance Variable

A variable declared inside a class but outside any method, and is unique to each instance of the class.