What Is the Expected Return on a Stock That Pays

question 22

Essay

What is the expected return on a stock that pays a 4 percent annual dividend and whose price is expected to appreciate annually at 6 percent?

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Definitions:

Cost of Merchandise Sold

The total expense incurred to purchase or produce the goods that have been sold during a particular period.

Credit Terms

The conditions under which credit is extended by a seller to a buyer, including repayment schedule, interest rates, and due dates.

Discount Period

A set time frame during which a buyer can pay less than the full amount due, usually as incentive for early payment to the seller.

Cash Discount

is a reduction in the invoice price offered by sellers to buyers as an incentive to encourage prompt payment of their accounts payable.