Suppose the Dividend Paid on a Share Takes One of Four

Multiple Choice

Suppose the dividend paid on a share takes one of four values, each with equal probability: $0.00, $0.08, $0.28 and $0.60. The share trades for 15 periods. The prevailing market interest rate is 10%. If you wanted to implement a flat fundament value for this share then you should set that fundamental value equal to:

A) $0.24.
B) $3.60.
C) $0.024.
D) $2.40.