Stock X Paid a Dividend of $2

question 102

Multiple Choice

Stock X paid a dividend of $2.50 yesterday. It is expected to grow at 7% indefinitely. X's return generally responds to market changes twice as much as does the average stock. Treasury bills currently yield 8%. The market is yielding 11%. What should X sell for today?

• A)$38.21
• B)$32.14
• C)$17.21
• D)$35.71

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