If the present value equation used to calculate the price of a stock you are considering buying is "[$7 / (0.04 - 0.03)], which of the following is correct, assuming that dividends will grow at a constant rate?
A) The dividend is $7 per share, the dividend growth rate is 4 percent, and the interest rate is 3 percent.
B) The stock price is $700, the dividend growth rate is 3 percent, and the interest rate is 4 percent.
C) The stock price is $7, the dividend growth rate is 3 percent, and the interest rate is 1 percent.
D) The dividend is $7 per share, the dividend growth rate is 1 percent, and the interest rate is 4 percent.
B
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After a $3 per-unit tax on seeing movies in theaters is imposed, attendance falls from 4,000 a week to 3,000 a week. The revenue from the tax is
A) less than $9,000 a week. B) $9,000 a week. C) between $9,000 a week and $12,000 a week. D) some amount that cannot be calculated without more information.
If you pay $17,500 for a $20,000 face value one-year Treasury bill, what is the rate of interest you will receive?
A) 8.75% B) 11.43% C) 12.5% D) 14.29%
Which of the following best characterizes the profit of a buyer of a futures contract?
A) spot price at settlement minus futures price at purchase B) futures price at settlement minus spot price at purchase C) futures price at purchase minus spot price at settlement D) spot price at purchase minus futures price at settlement
A new U.S. import quota on imported steel would be likely to: a. raise the cost of production to steel-using American firms. b. generate tax revenue to the government
c. decrease U.S. production of steel. d. increase the production of steel-using American firms.