The Required Return on a Stock Is Equal to Which

question 101

Multiple Choice

The required return on a stock is equal to which one of the following if the dividend on the stock decreases by a constant percent per year?

• A)(P₀/D₁) - g
• B)(D₁/P₀)/g
• C)Dividend yield + Capital gains yield
• D)Dividend yield - Capital gains yield
• E)Dividend yield × Capital gains yield

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Definitions:

Pricing Objective

The financial and marketing goals a company aims to achieve through its pricing strategies.

Profit Goal

A profit goal is a target set by a business for the net income it aims to achieve within a specific period, often driving strategy and decision-making.

Achieving A Target Return

In finance and business, achieving a target return refers to the goal of obtaining a specific level of profit or return on investment over a given period.

Pricing Strategy

Pricing Strategy encompasses the methods and logic a company uses to set prices for its products or services, influencing demand, profitability, and market positioning.