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Corporate Finance · Quiz 1 · 23 Feb 2025 · January 2025 term

Question 6: The LIC stock is trading at Rs 800 today. LIC is expected…

Question 6

+4 marksOne correct option

The LIC stock is trading at Rs 800 today. LIC is expected to pay a dividend of Rs 50 per share next year. If the growth rate of the LIC dividend is 4% every year and the appropriate rate of return is 10% per year, then according to the Gordon growth model

  1. A

    The LIC stock is underpriced, and an investor should buy LIC shares.

  2. B

    The LIC stock is overpriced, and an investor should buy LIC shares.

  3. C

    The LIC stock is underpriced, and an investor should sell LIC shares.

  4. D

    The LIC stock is overpriced, and an investor should sell LIC shares.

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Correct answer

  • A

    The LIC stock is underpriced, and an investor should buy LIC shares.

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Question 6 of 25 in the IIT Madras BS Corporate Finance (Corporate Finance) Quiz 1 paper sat on 23 Feb 2025, in the January 2025 term (IIT M DEGREE AN EXAM QDB2 23 Feb 2025). It carries 4 marks.

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