- CFA Exams
- CFA Level I Exam
- Topic 1. Quantitative Methods
- Learning Module 2. Time Value of Money in Finance
- Subject 3. Equity Instruments and the Time Value of Money
CFA Practice Question
You plan to buy a common stock and hold it for one year. You expect to receive both $1.50 in dividends and $26 from the sale of stock at the end of the year. If you wanted to earn a 15% return, the maximum price you would pay for the stock today is ______.
A. $22.61
B. $23.91
C. $24.50
User Contributed Comments 3
User | Comment |
---|---|
isida | 27.5 / original price = 1.15 27.5 / 1.15 = 23.91 |
Bibhu | The maximum price you would pay for the stock today = Sum of ( present value of Dividend + present value of sale of stock)= 1.5/(1+.15) + 26/(1+.15)= 23.91 is the answer. 0.15 is 15% interest that you want to earn from market |
jonnyp | 26 plus 1.50/X =1.15 27.50/1.15=23.91 |