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Which of the Following Statements Is CORRECT,assuming Stocks Are in Equilibrium

Question 82

Multiple Choice

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%,then its expected dividend yield is 5% as well.
C) A stock's dividend yield can never exceed its expected growth rate.
D) A required condition for one to use the constant growth model is that the stock's expected growth rate exceed its required rate of return.
E) Other things held constant,the higher a company's beta coefficient,the lower its required rate of return.

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