Assume That You Are Considering the Purchase of a Stock

question 27

Multiple Choice

Assume that you are considering the purchase of a stock which will pay dividends of $4.50 during the next year. Further assume that you will be able to sell the stock for $85.00 one year from today and that your required rate of return is 15 percent. How much would you be willing to pay for the stock today? (Round off to the nearest $0.01)

• A) $89.50
• B) $65.37
• C) $94.10
• D) $77.83

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Definitions:

Supportiveness

Supportiveness refers to the quality of providing encouragement, feedback, assistance, and a positive environment that fosters growth and development in others.

Aggressiveness

A behavior characterized by being bold or assertive, often aiming to dominate or control a situation.

Uncertain

The state of having incomplete knowledge or information, making outcomes or future events unpredictable.

Trust

Trust is the firm belief in the reliability, truth, ability, or strength of someone or something, foundational in both personal relationships and societal functions.