Question

the rlx company just paid a dividend of $3.10 per share on its stock. the dividends are expected to grow at a constant rate of 4.25 percent per year, indefinitely. assume investors require a return of 9 percent on this stock. what is the current price?

Answer 1

The current price of the stock is $68.04. The most recent price at which a security was sold on an exchange is the current price.

Does the market price match the present pricing?

Both buyers and sellers use the current price as a benchmark. The asking price is a good reflection of current worth, but depending on supply and demand, the actual selling price could be greater or lower.

The current price, often known as the "market price," is the cost that was most recently exchanged for a share or unit of security, coin, good, or precious metal that is traded on an exchange. The market capitalization, or "market cap," of a firm is calculated using the market price per share.

Given:

Current Price = D1/(ke - g)

D1 = 3.10 × (1 + .0425)

ke = 9%

g = 4.25%

Current price = 3.10 × (1+.0425)/(9% - 4.25%) = $68.04

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