Asked by
Ayeesha. layne
on Dec 09, 2024
Verified
Jessica's Home Interiors offers a common stock that pays an annual dividend of $1.60 a share. The company has promised to maintain a constant dividend. How much are you willing to pay for one share of this stock today if you want to earn a 9% return on your investments?
A) $17.78
B) $17.97
C) $18.05
D) $18.16
E) $18.34
Constant Dividend
A policy where a company pays out a fixed amount in dividends to shareholders on a regular basis, regardless of the company's earnings fluctuations.
Rate of Return
The gain or loss on an investment over a specific period, expressed as a percentage of the investment's initial cost.
- Acquire knowledge about the constant growth model utilized in dividend-paying stocks.
- Examine various rates of return and understand their significance on stock prices.
Verified Answer
MJ
Learning Objectives
- Acquire knowledge about the constant growth model utilized in dividend-paying stocks.
- Examine various rates of return and understand their significance on stock prices.