You want to earn a return of 10% on each of two stocks, A and B. Each of the stocks is expected to pay a dividend of $4 in the upcoming year. The expected growth rate of dividends is 6% for stock A and 5% for stock B. Using the constant-growth DDM, the intrinsic value of stock A _________.

Related MCQs

• You are considering acquiring a common share of Sahali Shopping Center Corporation that you would like to hold for 1 year. You expect to receive both $1.25 in dividends and $35 from the sale of the share at the end of the year. The maximum price you would pay for a share today is __________ if you wanted to earn a 12% return.
• A portfolio comprises of two stocks A and B. Stock A gives a return of 8%and stock B Gives a return of 7%. Stock A has a weight of 60% in the portfolio. What is the Portfolio Return?
• The constant-growth dividend discount model (DDM) can be used only when the ___________.
• Bill, Jim, and Shelly are all interested in buying the same stock that pays dividends. Bill plans on holding the stock for 1 year. Jim plans on holding the stock for 3 years. Shelly plans on holding the stock until she retires in 10years. Which one of the following statements is correct?
• A stock has an intrinsic value of $15 and an actual stock price of $13.50. You know that this stock
• Most of such stocks pay dividends and hence investors would like to buy and hold for long periods. Such a portfolio is called;
• In a variable growth model, the dividend is believed to grow at a constant pace forever after an initial growth period.
• According to the semi-strong form of the EMH, investors who invest in a stock after a highly positive announcement concerning the stock can expect to earn a(n)
• Which of the following goals will be considered by the individuals who invest in upcoming companies and wait till the companies to grow and then harvest their profits and move on to other company?
• These funds are stocks funds that invest in stocks with the potential for long term capital appreciation