Interior Airline Is Expected to Pay a Dividend of $3

question 54

Multiple Choice

Interior Airline is expected to pay a dividend of $3 in the upcoming year. Dividends are expected to grow at the rate of 10% per year. The risk-free rate of return is 4%, and the expected return on the market portfolio is 13%. The stock of Interior Airline has a beta of 1.4. Using the constant-growth DDM, the intrinsic value of the stock is ________.

• A) $45.45
• B) $22.73
• C) $27.78
• D) $41.67

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Definitions:

Boolean Expressions

Logical statements that can only result in true or false, used in programming for decision making.

Logical Expressions

Combinations of variables, constants, and operators that evaluate to true or false, used in control flow statements.

Logical And Operator

A binary operator that returns true if both operands are true and false otherwise, commonly represented as && in many programming languages.

Logical Not Operator

A unary operator (!) that inverts the truth value of its operand.