Suppose you buy a stock that sells for $20. It's expected annual dividend is $2 and you expect its price to be $25 in one year. What is your expected rate of return on the stock?
What will be an ideal response?
The expected rate of return is $2/$20 + ($25 - $20)/$20 = 35%.
You might also like to view...
Proponents of a command economy argue that it promotes:
a. efficiency. b. equity. c. consumer sovereignty. d. economic growth.
The price elasticity of a vertical demand curve is always
a. infinitely large. b. zero. c. one. d. increasing as price increases.
The share of federal government spending on healthcare has risen substantially over time. This is most likely a result of
a. medical advances that provide new, better, but often more expensive medical treatments. b. a rising population of the elderly in the economy. c. health insurance reform that will include government subsidies for health insurance for many low-to-moderate income families. d. All of the above are important factors.
Larry was accepted at three different graduate schools, and must choose one. Elite U costs $50,000 per year and did not offer Larry any financial aid. Larry values attending Elite U at $60,000 per year. State College costs $30,000 per year, and offered Larry an annual $10,000 scholarship. Larry values attending State College at $40,000 per year. NoName U costs $20,000 per year, and offered Larry a full $20,000 annual scholarship. Larry values attending NoName at $15,000 per year. Larry's opportunity cost of attending State College is:
A. $20,000 B. $35,000 C. $30,000 D. $15,000