What Is the Maximum Price an Investor Should Pay for the Common

question 30

Multiple Choice

What is the maximum price an investor should pay for the common stock of a firm that has no growth opportunities but pays an annual dividend of $1.85? The market rate of return on similar securities is 14.5 percent.

• A)$9.52
• B)$10.88
• C)$12.76
• D)$17.00
• E)$21.18

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Definitions:

Interest Group

An organized group of individuals or organizations that aims to influence public policy or promote a particular cause or interest.

Beliefs and Values

Fundamental convictions or principles that guide behavior and decision-making, reflecting what is important to an individual or organization.

Socialization

The process by which individuals learn and internalize the norms, values, behaviors, and social skills appropriate to their society or cultural group.

Ideological Control

A method used to manipulate and shape public beliefs and values in favor of certain ideologies, often exercised through media, education, and political discourse.