The Last Paid Dividend Is $2 for a Share of Common

question 26

Multiple Choice

The last paid dividend is $2 for a share of common stock that is currently selling for $20. What is the cost of common equity if the long-term growth rate in dividends for the firm is expected to be 8%?

• A) 10.8%
• B) 12.8%
• C) 14.8%
• D) 16.8%
• E) 18.8%

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Definitions:

Sherman Antitrust Act

A landmark federal statute in the United States passed in 1890 that prohibits monopolistic practices and promotes competition.

Prohibits Monopolies

Refers to laws or regulations designed to prevent the control of a market by a single entity, ensuring competition.

Free Market

An economic system where prices are determined by unrestricted competition between privately owned businesses without government intervention.

Greenwashing

The practice of making misleading claims about the environmental benefits of a product, service, or company to present an eco-friendly image.