A Company Has Stock Which Costs $41

question 63

Multiple Choice

A company has stock which costs $41.50 per share and pays a dividend of $2.50 per share this year. The company's cost of equity is 7%. What is the expected annual growth rate of the company's dividends?

• A) 0.98%
• B) 1.96%
• C) 2.94%
• D) 3.92%

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Definitions:

Saving Rate

The proportion of disposable income that is saved rather than spent on consumption of goods and services.

Growth Rate

The growth rate measures the rate of increase in the size or value of something over a specific period, often used in the context of economic growth.

Kiva Form

A ceremonial structure fundamental to the ancient Pueblo cultures in the American Southwest, traditionally circular in shape and semi-subterranean, used for religious rituals.

Semi-subterranean

Refers to buildings or structures that are partially below ground level, commonly used for thermal efficiency or protection.