If a Stock's Dividend Is Expected to Grow at a Constant

question 18

Multiple Choice

If a stock's dividend is expected to grow at a constant rate of 6 percent in the future and it has just paid a dividend of $3.00 per share,and you have an alternative investment of equal risk that will earn a 9 percent rate of return,what would you be willing to pay per share for this stock?

• A)$9
• B)$20
• C)$45
• D)$106

Recognize the importance of game theory in explaining behavior in oligopolies and the interdependence of firms.

Understand the concept and examples of tacit and overt collusion in regulating competition among firms.

Identify conditions under which tacit collusion is difficult to achieve or maintain in markets.

Recognize the role of international cartels, particularly OPEC, in affecting global markets.

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