185 $
© 2014 Pearson Canada Inc.$- In the one-period valuation model with no dividend payments the current price of the stock is
given by ____.
A) P 0 =
B) P 0 =
+
C) P 0 =
× 100
D) P 0 = × 365
Answer: A
Diff: 2 Type: MC Page Ref: 138
Skill: Recall
Objective List: 7.1 Illustrate how stocks are valued as the present value of dividends
Using the one-period valuation model, assuming a year-end dividend of $0.11, an expected
sales price of $110, and a required rate of return of 10 percent, the current price of the stock
would be ____.
A) $110.11
B) $121.12
C) $100.10
D) $100.11
Answer: C
Diff: 3 Type: MC Page Ref: 138
Skill: Applied
Objective List: 7.1 Illustrate how stocks are valued as the present value of dividends
Using the one-period valuation model, assuming a year-end dividend of $1.00, an expected
sales price of $100, and a required rate of return of 5 percent, the current price of the stock would
be ____.
A) $110.00
B) $101.00
C) $100.00
D) $96.19
Answer: D
Diff: 3 Type: MC Page Ref: 138
Skill: Applied
Objective List: 7.1 Illustrate how stocks are valued as the present value of dividends