Finance Practice Quiz 1102

# Finance Practice Quiz 1102 - \$0.50...

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You are estimating the present value of a share of common stock that pays a \$0.50  dividend per share at the end of the year, and can be sold for \$18.94 per share in a year  from now.  If your required rate of return is 12 percent, then which of the following is  closest to the current value of a share of this common stock? \$16.46 \$16.91 \$17.36 If you pay \$90 for a share of preferred stock that pays an annual dividend of \$7.20  forever, then what is your expected annual rate of return on this investment? 6.5% 8.0% 12.5% You are interested in the one-year, expected return on investment for a share of  common stock that costs \$18.00 today, pays a \$0.50 dividend at the end of the year, and  can be sold for \$18.94 in a year from now.  Which of the following is closest to the one- year holding period return from buying this share of common stock today?

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