Investors required rate of return for particular security

Reference no: EM131796485

Question: An issue of common stock currently sells for $50.00 per share, has an expected dividend to be paid at the end of the year of $2.50 per share, and has an expected growth rate to infinity of 5% per year. If investors' required rate of return for this particular security is 12% per year, then this security is :

A) overvalued and offering an expected return higher than the required return.

B) undervalued and offering an expected return higher than the required return.

C) overvalued and offering an expected return lower than the required return.

D) undervalued and offering an expected return lower than the required return.

Reference no: EM131796485

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