If a Stock's Dividend Is Expected to Grow at a Constant

Multiple Choice

If a stock's dividend is expected to grow at a constant rate of 5% a year,which of the following statements is CORRECT? The stock is in equilibrium.

A) The expected return on the stock is 5% a year.
B) The stock's dividend yield is 5%.
C) The price of the stock is expected to decline in the future.
D) The stock's required return must be equal to or less than 5%.
E) The stock's price one year from now is expected to be 5% above the current price.