A Stock Is Expected to Pay a Year-End Dividend of $2.00

question 4

Multiple Choice

A stock is expected to pay a year-end dividend of $2.00, i.e., D1 = $2.00. The dividend is expected to decline at a rate of 5% a year forever (g = -5%) . If the company is in equilibrium and its expected and required rate of return is 15%, which of the following statements is CORRECT?

• A) The company's current stock price is $20.
• B) The company's dividend yield 5 years from now is expected to be 10%.
• C) The constant growth model cannot be used because the growth rate is negative.
• D) The company's expected capital gains yield is 5%.
• E) The company's expected stock price at the beginning of next year is $9.50.

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Definitions:

Critical Leadership Functions

are essential roles and responsibilities that leaders must perform to ensure the success and sustainability of their organizations or teams.

Formal Leader

A person who holds an official position of authority and is recognized within the hierarchical structure of an organization to guide and influence others.

Effective Team Performance

The extent to which a team successfully achieves its goals and meets its members' psychological needs, leading to satisfaction and success.

Leader

An individual who guides or directs a group towards achieving a common goal.