Is the Following Common Stock Priced Correctly? If No, What

question 63

Essay

Is the following common stock priced correctly? If no, what is the correct price?
Price = $26.25
Required rate of return = 13%
Dividend year 0 = $2.00
Dividend year 1 = $2.10

---

Definitions:

Violate

To break or fail to comply with a rule, law, agreement, or principle.

Deception

The act of misleading or tricking someone into believing something that is not true.

Police

Law enforcement officers tasked with maintaining public order, preventing, and detecting crime.

Supreme Court

The highest federal court in the United States, with ultimate appellate jurisdiction over all federal and state court cases that involve a point of federal law.