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You Wish to Earn a Return of 13% on Each

Question 3

Multiple Choice

You wish to earn a return of 13% on each of two stocks,X and Y.Stock X is expected to pay a dividend of $3 in the upcoming year while Stock Y is expected to pay a dividend of $4 in the upcoming year.The expected growth rate of dividends for both stocks is 7%.The intrinsic value of stock X ______.


A) will be greater than the intrinsic value of stock Y
B) will be the same as the intrinsic value of stock Y
C) will be less than the intrinsic value of stock Y
D) A or B
E) none of the above is a correct answer.

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