A Stock's Dividend Is Expected to Grow at a Constant

question 9

Multiple Choice

A stock's dividend is expected to grow at a constant rate of 5 percent a year. Which of the following statements is most correct?

• A) The expected return on the stock is 5 percent a year.
• B) The stock's dividend yield is 5 percent.
• C) The stock's price one year from now is expected to be 5 percent higher.
• D) Statements a and c are correct.
• E) All of the statements above are correct.

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Definitions:

Jungian Theory

A psychological theory developed by Carl Jung that focuses on concepts such as the collective unconscious, archetypes, and the process of individuation.

Radical Behaviorism

A theory in psychology that emphasizes the importance of external behaviors in studying and treating psychological disorders, considering learned behaviors as the main drivers of action.

Reinforcement

In psychology, a process of encouraging or establishing a pattern of behavior by offering rewards or positive outcomes.

Punishment

A consequence that decreases the likelihood of a behavior being repeated.