Which of the following statements is CORRECT, assuming stocks are in equilibrium? A) The dividend yield on
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Question:
Which of the following statements is CORRECT, assuming stocks are in equilibrium?
A) The dividend yield on a constant growth stock must equal its expected total return minus its expected capital gains yield.
B)Assume that the required return on a given stock is 13%. If the stock's dividend is growing at a constant rate of 5%, itsexpected dividend yield is 5% as well.
C) A stock's dividend yield can never exceed its expected growthrate.
D) A required condition for one to use the constant growth modelis that the stock's expected growth rate exceeds its required rateof return.
Related Book For
Equity Asset Valuation
ISBN: 978-0470571439
2nd Edition
Authors: Jerald E. Pinto, Elaine Henry, Thomas R. Robinson, John D. Stowe, Abby Cohen
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