The XYZ Company,whose Common Stock Is Currently Selling for $40

question 45

Multiple Choice

The XYZ Company,whose common stock is currently selling for $40 per share,is expected to pay a $2.00 dividend in the coming year.If investors believe that the expected rate of return on XYZ is 14%,what growth rate in dividends must be expected?

• A)5%
• B)14%
• C)9%
• D)6%

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Definitions:

Unrelated Diversification

Is used when a firm attempts to operate several unique businesses in different, unrelated markets. The basic logic behind unrelated diversification is that a company can shield itself from the adverse effects of business cycles, unexpected competition, and other economic fluctuations.

Analyzer Strategy

A business approach where a company monitors the market and competitors' actions, innovates incrementally, and follows the market leader's successful moves.

Entrepreneurial Employees

Employees who exhibit entrepreneurial characteristics within an organization, including innovation, risk-taking, and proactiveness, contributing to the company's growth.

Flexible

The ability to easily adapt to new, different, or changing requirements and situations.