A Stock Whose Price Can Be Computed by Dividing the Annual

question 197

Multiple Choice

A stock whose price can be computed by dividing the annual dividend amount by the required rate of return is called a _______ growth stock.

• A) Constant.
• B) Supernormal.
• C) Zero.
• D) Capital gains.
• E) Dividend.

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Definitions:

Accrual

Accrual is an accounting method where revenues and expenses are recorded when they are earned or incurred, regardless of when cash is exchanged.

Liability

A liability is a company's financial debt or obligation that arises during the course of business operations, listed on the right-hand side of the balance sheet.

Asset

Resources with economic value owned by an individual, corporation, or country, expected to provide future benefits.

Tax Deductible

Expenses that can be subtracted from gross income to reduce the amount of income subject to income tax.