Lucy is considering investing in a particular stock with a dividend that has grown at a constant rate for some time. The observed rate is about 4 %. The current expected rate of return on this kind of stock is 14 %, and the last paid dividend (DO) was $2.00. What is the value of a share of this stock? (a) $21.60 (b) $20.80 (c) $19.80 (d) $20.00.
Lucy is considering investing in a particular stock with a dividend that has grown at a constant rate for some time. The observed rate is about 4 %. The current expected rate of return on this kind of stock is 14 %, and the last paid dividend (DO) was $2.00. What is the value of a share of this stock? (a) $21.60 (b) $20.80 (c) $19.80 (d) $20.00.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Value of share
Transcribed Image Text:Lucy is considering investing in a particular
stock with a dividend that has grown at a
constant rate for some time. The observed rate
is about 4 %. The current expected rate of
return on this kind of stock is 14 %, and the
last paid dividend (DO) was $2.00. What is
the value of a share of this stock?
(a) $21.60
(b) $20.80
(c) $19.80
(d) $20.00.
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