A Stock Is Expected to Pay $1

question 27

Multiple Choice

A stock is expected to pay $1.25 per share every year indefinitely and the equity cost of capital for the company is 8.4%. What price would an investor be expected to pay per share ten years in the future?

• A) $14.88
• B) $22.32
• C) $29.76
• D) $37.20

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Definitions:

Defense Mechanisms

Psychological strategies employed unconsciously by individuals to protect themselves from anxiety and to cope with reality or maintain self-image.

Oedipal Crisis

An Oedipal Crisis, in Freudian theory, is a phase in a child's development characterized by conflicting emotions toward the opposite-sex parent and envy or rivalry toward the same-sex parent.

Denial

In psychoanalytic theory, the defense mechanism that allows the mind to deny that a current source of anxiety exists.

Defense Mechanism

Psychological strategies used unconsciously by individuals to protect themselves from anxiety arising from unacceptable thoughts or feelings.