CFA Practice Question

There are 191 practice questions for this study session.

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
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