As Illustrated Using the Dividend Growth Model, the Total Return

question 49

Multiple Choice

As illustrated using the dividend growth model, the total return on a share of common stock is comprised of a ________________.

• A) Capital gains yield and a dividend growth rate.
• B) Capital gains growth rate and a dividend growth rate.
• C) Dividend payout ratio and a required rate of return.
• D) Dividend yield and the present dividend.
• E) Dividend yield and a capital gains yield.

---

Definitions:

Well-Diversified Portfolio

A collection of investments that spread out risk by incorporating a wide variety of assets, thereby minimizing the impact of any single asset's performance on the overall portfolio.

Fama and French

Two economists known for their research on the factors that influence stock returns, notably the three-factor model which includes market risk, size, and value factors in explaining stock returns.

Multifactor Model

A financial model that evaluates securities by considering multiple economic and financial factors to explain asset prices and predict investment returns.

Market Index

A statistical measure that tracks the performance of a specific basket of stocks representing a particular market or sector.