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Stock X Paid a Dividend of $2

Question 102

Multiple Choice

Stock X paid a dividend of $2.50 yesterday. It is expected to grow at 7% indefinitely. X's return generally responds to market changes twice as much as does the average stock. Treasury bills currently yield 8%. The market is yielding 11%. What should X sell for today?


A) $38.21
B) $32.14
C) $17.21
D) $35.71

Correct Answer:

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