Which of the Following Statements Is FALSE

question 10

Multiple Choice

Which of the following statements is FALSE?

• A)We must discount the cash flows from stock based on the equity cost of capital for the stock.
• B)The dividend yield is the percentage return the investor expects to earn from the dividend paid by the stock.
• C)The firm might pay out cash to its shareholders in the form of a dividend.
• D)The dividend yield is the expected annual dividend of a stock,divided by its expected future sale price.

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Definitions:

Principle Amount

The original sum of money borrowed in a loan or put into an investment.

Time

A continuous, measurable quantity in which events occur in a sequence from the past through the present to the future.

Simple Interest

Interest computed on the original sum of a loan or deposit, not including the effects of compounding throughout the duration.

Simplification

The process of reducing a mathematical expression or equation to its simplest form.