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:

Automatic Emotional Responses

Immediate and unconscious emotional reactions to certain stimuli or situations without deliberate thought.

Joseph LeDoux

A neuroscientist known for his work on survival circuits, including mechanisms of fear and emotion in the brain.

Cognitive Reactions

Mental processes as responses to external stimuli, involving perception, memory, judgment, and reasoning.

Emotional Reactions

The spontaneous and subjective feelings triggered by specific stimuli or events.