The Dividend Payout Ratio,the Required Rate of Return on Common

question 34

Multiple Choice

The dividend payout ratio,the required rate of return on common equity,and the expected growth rate of stock dividends are the major variables that affect

• A) The profit margin for the S&P Industrials Index.
• B) The earnings multiplier for common stock.
• C) Aggregate tax revenues.
• D) Capital gains tax revenues.
• E) Aggregate GDP.

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Definitions:

Stock Price

The current market price at which a share of a company's stock can be bought or sold.

Volatile

Describes an asset, security, or market characterized by rapid and significant price changes over a short period.

Option

A financial derivative that gives the holder the right, but not the obligation, to buy or sell an asset at an agreed-upon price within a certain period.

Strike Price

The pre-determined price at which the holder of an option can buy (in the case of a call option) or sell (in the case of a put option) the underlying asset.