If D? = $1

question 3

Multiple Choice

If D? = $1.75, g (which is constant) = 3.6%, and P? = $32.00, what is the stock's expected total return for the coming year?

• A) 8.37%
• B) 8.59%
• C) 8.81%
• D) 9.03%
• E) 9.27%

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Definitions:

Simple Interest

Interest calculated on the principal amount of a loan or investment, without compounding over time.

Yield

The income return on an investment, typically expressed as an annual percentage rate based on the investment’s cost, its current market value, or its face value.

Promissory Note

A financial instrument that contains a written promise by one party to pay another a definite sum of money either on demand or at a specified future date.

Commercial Paper

A short-term unsecured debt instrument issued by corporations, typically for financing accounts receivable and inventories.