Suppose that the price of Goldman Sachs stock is currently $142 per share. You expect that the

Question:

Suppose that the price of Goldman Sachs stock is currently $142 per share. You expect that the firm will pay a dividend of $1.40 per share at the end of the year, at which time you expect that the stock will be selling for $160 per share. If you require a return of 8% to invest in this stock, should you buy it? Briefly explain.

Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...