A Stock Is Expected to Pay $2

question 64

Multiple Choice

A stock is expected to pay $2.60 per share every year indefinitely and the equity cost of capital for the company is 11%. What price would an investor be expected to pay per share next year?

• A) $5.91
• B) $11.82
• C) $17.73
• D) $23.64

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Definitions:

Warm Climate

A geographic area characterized by high temperatures for most of the year.

Contamination

The presence of unwanted substances or qualities in something that make it impure or unsuitable for use.

Longitudinal Studies

Research methods that involve repeated observations of the same variables over short or long periods of time.

Crying Relieves Tension

Indicates the common belief that crying can help reduce emotional stress and provide a sense of relief.