You Are Considering Buying a Share of Stock in XYZ

question 147

Multiple Choice

You are considering buying a share of stock in XYZ Corporation.At the end of years 1,2,and 3 the stock will pay you a dividend of $15.In addition,at the end of the third year you expect to sell the share of stock for $100.If the interest rate is 3%,how much is the share of XYZ stock worth to you today?

• A)$123.14
• B)$133.94
• C)$137.96
• D)$145.00

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Definitions:

Bearer Instrument

A financial document not assigned to a specific holder, thus whoever holds the document has the right to cash or transfer it.

Order Instrument

A financial instrument that is payable to a specific person or their order, thus requiring endorsement for transfer.

Bearer Instrument

A negotiable financial instrument, such as a check or bond, that entitles the holder in possession to the rights of the instrument, with no need to prove ownership.

Assignee

The party who receives rights or interests in a contract from the assignor.