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CFA Level 1 Exam

3959 Questions

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Question No. 1

An analyst with Smith, Kleen, & Beetchnutty is attempting to value shares of an insurance company. The insurance company has been growing at a very stable rate for much of the last decade, and is expected to continue growing at a similar pace in the future. In determining the value of the insurance company's common stock, assume the following information:


Required rate of return on equity: 12.75% per year
Expected dividend growth rate: 9.50% per year
Dividend at t0: $0.88

Using this information, determine the value per-share of this insurance company's common stock.
Choose the correct option from the given list.
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