Your friend has recommended that you purchase stock in company XYZ- It is expected to pay a $4 dividend, and has historically grown at 5%- If the required rate of return is 12%, what is the estimated value of a share of XYZ stock?

What is a a stock?

A stock represents an ownership stake in a company as a common shareholder.

Common stocks allow shareholders to vote on company issues, with most companies granting one vote per share.

Some companies also offer stockholders dividend payouts, giving investors a stream of income on top of the market value of the stock.