Which of the Following Statements Is CORRECT,assuming Stocks Are in Equilibrium

question 82

Multiple Choice

Which of the following statements is CORRECT,assuming stocks are in equilibrium?

• A) The dividend yield on a constant growth stock must equal its expected total return minus its expected capital gains yield.
• B) Assume that the required return on a given stock is 13%.If the stock's dividend is growing at a constant rate of 5%,then its expected dividend yield is 5% as well.
• C) A stock's dividend yield can never exceed its expected growth rate.
• D) A required condition for one to use the constant growth model is that the stock's expected growth rate exceed its required rate of return.
• E) Other things held constant,the higher a company's beta coefficient,the lower its required rate of return.

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