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Question 12

Multiple Choice

The next questions refer to the following.
Suppose that a firm's dividends have been growing by 4% annually and this year's dividend is $10 per share.
-If the required rate of return is 8%,then


A) no one will purchase this stock
B) the stock must generate capital gains of 4% per year
C) the current stock price is $250 per share
D) the stock is over-valued by 4%, and its share price will decline according to Tobin's q
E) the stock is yielding capital losses of 4% annually

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