Problemalto stock pays an annual dividend of 110 a share, Ask an Expert

Finance

Problem:

Alto stock pays an annual dividend of $1.10 a share and has done so for the past six years. No changes in the dividend amount are expected. The relevant market rate of return is 7.8 percent. Given this, one share of this stock:

Explain comprehensively and show all workings.

A. is basically worthless as it offers no growth potential.

B. is valued as a constant growth stock.

C. is valued as perpetuity.

D. is valued as a differential growth stock.

E. has a current market value of $1.10.

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Basic Finance, Finance

Category:- Basic Finance
Reference No.:- M91147058

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