### CFA Practice Question

There are 536 practice questions for this topic.

### CFA Practice Question

What would Jackie pay for a stock that is expected to pay a \$1.50 dividend in one year if the expected dividend growth rate is 3% and she requires a 16% return on her investment? Jackie would pay ______.

A. \$13.14
B. \$12.43
C. \$11.54
D. \$14.30
E. \$12.33

User Comment
Rajain Why C 1.5/(0.16-0.03) = 11.5384
cfahanoi Expected devidend = D1 => V = 1.5/(.16-.03) = 11.54
rfvo Remember expected dividend, so no need to multiply growth. Current dividend multiply by growth rate.
fmhp Thank you rfvo: good hint!
moneyguy tricky one.
Jamberto wouldn't it be: (D*1+G)/(R-G) = (1.50*1.03)/(.16-.03) = 11.88 ???
jonan203 jamberto:

no, 1.5 is the future dividend that has NOT been paid, which implies that the previous dividend was 1.45.

[1.45(1.03)] / (.16 - .03) = 11.54
tochiejehu D1 =Expected dividend=1.50 and apply d constant growth model
Inaganti6 hahaha this is tricky ?
MathLoser No, it is not.