Question 1
You are considering buying a zero growth stock. If the firm pays a $15 annual dividend, and your required rate of return is 7.5%, what is the maximum price you would pay for this stock?
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$100
◦
$150
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$180
◦
$200
Question 2
You are considering buying a zero growth stock. If the firm pays a $3.70 annual dividend, and your required rate of return is 16%, what is the maximum price you would pay for this stock?
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$22.31
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$22.50
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$23.13
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$24.03