Praetorian Industries Will Pay a Dividend of $2

question 7

Multiple Choice

Praetorian Industries will pay a dividend of $2.50 per share this year and has an equity cost of capital of 8%. Praetorian's stock is currently trading at $84 per share. By comparing Praetorian with similar firms, an investor expects that its dividends will grow by up to 5% per year. What is the best next step that the investor should take regarding Praetorian's stock?

• A) Sell any Praetorian stock that she owns.
• B) Short Praetorian's stock.
• C) Revise Praetorian's equity cost of capital.
• D) Revise her estimate of Praetorian's dividend growth.

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Definitions:

Contraception Method

Various techniques and devices used to prevent pregnancy, including hormonal pills, barriers like condoms, intrauterine devices, and surgical procedures.

Vasectomy

A surgical procedure for male sterilization or permanent contraception.

Tubal Ligation

A surgical procedure used for sterilization in which a woman's fallopian tubes are clamped and blocked, or severed and sealed, to prevent eggs from reaching the uterus for fertilization.

Oral Contraceptives

A method of birth control in pill form that is taken orally to prevent pregnancy, typically by altering hormone levels to prevent ovulation.