You Want to Earn a Return of 10% on Each

question 24

Multiple Choice

You want to earn a return of 10% on each of two stocks, A and B. Each of the stocks is expected to pay a dividend of $4 in the upcoming year. The expected growth rate of dividends is 6% for stock A and 5% for stock B. Using the constant-growth DDM, the intrinsic value of stock A ________.

• A) will be higher than the intrinsic value of stock B
• B) will be the same as the intrinsic value of stock B
• C) will be less than the intrinsic value of stock B
• D) The answer cannot be determined from the information given.

---

Definitions:

Localized Amyloidosis

A form of amyloidosis where protein deposits build up in a specific area of the body, rather than widespread distribution.

Testicular Hyperfunction

An abnormal condition where the testes produce excess hormones, especially testosterone, possibly leading to various health issues.

Cardiomyopathy

A group of diseases that affect the heart muscle, making it harder for the heart to pump blood to the rest of the body.

Glycogen Storage

The process by which glucose is stored in the liver and muscle cells in the form of glycogen for energy use during periods of fasting or increased demand.