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

question 53

Multiple Choice

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

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

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Definitions:

High-performance Orientation

An organizational or team focus on achieving high levels of performance and excellence, often through setting challenging goals and standards.

Favorable Judgments

Positive evaluations or opinions formed about something or someone based on evidence and reasoning.

Competence

The ability to do something successfully or efficiently, encompassing skills, knowledge, and experience.

Cultural Diversity

The presence of multiple and different cultural groups, traditions, and practices within a community or organization.