The Expected Return on Natter Corporation's Stock Is 14

question 37

Multiple Choice

The expected return on Natter Corporation's stock is 14%.The stock's dividend is expected to grow at a constant rate of 8%,and it currently sells for $50 a share.Which of the following statements is CORRECT?

• A) The stock's dividend yield is 7%.
• B) The stock's dividend yield is 8%.
• C) The current dividend per share is $4.00.
• D) The stock price is expected to be $54 a share one year from now.
• E) The stock price is expected to be $57 a share one year from now.

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Definitions:

Working Capital

The difference between a company's current assets and current liabilities, indicating the short-term financial health and operational efficiency of a business.

Current Ratio

A liquidity ratio that measures a company's ability to pay short-term and long-term obligations, calculated as current assets divided by current liabilities.

Acid-test Ratio

A financial metric that measures a company's ability to pay off its current liabilities with its most liquid assets without relying on the sale of inventory.

Debt-to-Equity Ratio

A ratio used to measure the balance between the amount of debt and equity financing a company's assets.