USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)

question 41

Multiple Choice

USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)
Assume that the dividend payout ratio will be 45 percent when the rate on long-term government bonds falls to 9 percent. Because investors are becoming more risk averse, the equity risk premium will rise to 7 percent and investors will require a 16 percent return. The return on equity will be 14 percent.
-Refer to Exhibit 9.4. To what price will the market rise if the earnings expectation is $10.00?

• A) $71.40
• B) $66.30
• C) $54.20
• D) $77.00
• E) $51.10

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Definitions:

Poverty

The state of being extremely poor, with inadequate access to basic needs such as food, clean water, shelter, and education.

Epidemics

Widespread occurrences of an infectious disease in a community at a particular time, affecting a disproportionately high number of individuals.

Industrial Countries

Nations characterized by high levels of industrialization, advanced technological infrastructure, and higher standards of living.

High-Income Economies

Economies categorized by a high gross national income per capita, indicating a high standard of living and economic productivity.