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

question 2

Multiple Choice

a stock's dividend is expected to grow at a constant rate of 5% a year, which of the following statements is CORRECT? The stock is in equilibrium.

• A) The stock's dividend yield is 5%.
• B) The price of the stock is expected to decline in the future.
• C) The stock's required return must be equal to or less than 5%.
• D) The stock's price one year from now is expected to be 5% above the current price.
• E) The expected return on the stock is 5% a year.

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Definitions:

Total Cost Data

The sum of all costs associated with the production or delivery of goods and services.

Mixed Cost

A cost that contains both variable and fixed cost components, making it partly dependent on the level of output or activity.

High-low Method

A method utilized in cost accounting that predicts variable and fixed expenses by examining the most and least active periods.

Maintenance Cost

Expenses incurred to keep property, equipment, or machinery in efficient operating condition.