ABC, Inc., common stock has a current market price of $52 per share. Dividends have been $5 a share for several years and are expected to remain at that level for the foreseeable future. Other companies of similar risk and characteristics yield 10% in the marketplace. What should you recommend concerning ABC stock?
PROVIDE SOME CALCULATIONS AND STEPS
(A) It should be purchased at $52 per share, because that is a fair price.
(B) It should be purchased at $52 per share, because it will yield 10.1%.
(C) It should not be purchased, because it will yield only 2%.
(D) It should not be purchased at more than $50 per share.