You Plan to Buy Some Common Stock and Hold It

question 56

Multiple Choice

You plan to buy some common stock and hold it for one year. You expect to receive both $1.20 in dividends and $62 from the sale of stock at the end of the year. If an investor wants to earn a 13% return, the maximum price you would pay for the stock today is

• A) $51.98
• B) $54.93
• C) $55.93
• D) $63.20

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Definitions:

Performance-Avoid Goal Orientation

A preference to avoid negative judgments about the outcome of one’s performance.

Performance-Prove Goal Orientation

A preference to obtain favourable judgments about the outcome of one’s performance.

Equity Theory

A theory that focuses on determining whether the distribution of resources is fair to both relational partners.

Hourly Basis

A method of compensation where individuals are paid for each hour of work performed, commonly used for part-time or temporary jobs.